Parliament Square: Demonstrations and Placards

Lord Peyton of Yeovil: asked Her Majesty's Government:
	What further steps they propose to take to remove the demonstrations and placards from Parliament Square.

Baroness Scotland of Asthal: My Lords, the Government introduced legislation to deal with demonstrations around Parliament. Organisers must seek authorisation for their demonstration from the commissioner. The commissioner cannot ban a demonstration, but can impose conditions. It is for the commissioner to decide what conditions should be placed on the demonstrations in Parliament Square.

Lord Peyton of Yeovil: My Lords, rather unusually, I am grateful to the noble Baroness for that reply, so far as it went. I take it that I am right in thinking that the Government would like to see that dirty mess in Parliament Square cleared up as soon as possible. I also take it—am I right?—that the Government, just as everyone else, would not like the impression to gain ground that anyone who thought that they had a message was free to annex and use for that purpose Parliament Square or similar sites throughout London. Is the noble Baroness satisfied that the Commissioner of the Metropolitan Police is doing his full duty? Is there not some danger that the lack of police activity so far will awaken unfavourable comparisons with the vigour that they showed when that poor lady made a very innocent and brief demonstration at the foot of the cenotaph recently?

Baroness Scotland of Asthal: My Lords, I thank the noble Lord for his courtesy. I always enjoy the rare occasions when I have his assent. He is absolutely right. The Government were determined that this issue should be addressed, which is why we have the legislation. I am confident that the commissioner is doing his duty within the precepts of the law that we set in this Parliament.

Lord Peston: My Lords, did the other place totally misunderstand the legislation? Every Member of Parliament in the other place to whom I have spoken thought that the immediate effect of passing this law would be that that mess in Parliament Square would be removed. A very long time has gone by and the mess is still there. I, for one, know of no place in the democratic world where anything like that would be regarded as a fundamental privilege for the sake of freedom of speech. Quite the contrary: in most of our friends' Parliaments, armed police would busily remove the bloke within a minute.

Baroness Scotland of Asthal: My Lords, of course I understand the frustration expressed by my noble friend in relation to this matter and, indeed, the frustration felt by the noble Lord, Lord Peyton, along with many others. We have brought in legislation to deal with it; there is a procedure and it is now being followed vigorously.

Viscount Tenby: My Lords, does the Minister recall that, more months ago than I care to recall, I asked her a Question on this specific point? Does she agree that the occupation of the south side of Parliament Square by one individual, however colourful and newsworthy, in fact precludes other legitimate groups that in a democracy may feel they have a right to protest outside Parliament? Would one way of getting around this be to make it quite clear to anyone with such pretensions in the future that there will be a strict time limit on their protest, so that one person is no longer able to hijack the patch opposite Parliament? I am trying to be helpful in suggesting this.

Baroness Scotland of Asthal: My Lords, I understand absolutely the point made by the noble Viscount, Lord Tenby. It is for that reason that the commissioner is entitled to set conditions in relation to demonstrations, and I understand that that has been done. Noble Lords know the process: an application is made for permission to demonstrate; the commissioner considers the application and determines the conditions; those conditions are then imposed and if the person fails and/or refuses to obey them, enforcement action can be taken against him. That is the process and I understand that it is currently being followed.

Lord Lloyd of Berwick: My Lords, the decision causing the problem about which so many noble Lords are concerned arises from whether the Act was going to apply retrospectively. Has not that decision now been reversed in the Court of Appeal and the problem, I think, has gone?

Baroness Scotland of Asthal: My Lords, the noble and learned Lord is absolutely right to say that the decision was reversed by the Court of Appeal so that the Act applies to all those who have been or are now in this position, and the appropriate process is currently being gone through. I know that the noble and learned Lord would not want us to transgress the legislation and thus not comply with the rules.

Lord Dholakia: My Lords, does the Minister—

Lord Renton: My Lords—

Lord Skelmersdale: My Lords—

Lord Rooker: My Lords, it is the turn of the Liberal Democrats.

Lord Dholakia: My Lords, the Question relates not only to placards but to demonstrations. It would be helpful to know from the Minister the type of conditions that are being imposed by the police. Will she ensure that the police do not overreact? I refer particularly to the case of the woman outside Downing Street who was shouting out the names of our dead soldiers and the way in which she was arrested and taken away. We need to ensure that such things do not happen.

Baroness Scotland of Asthal: My Lords, the noble Lord can be confident that the police are not overreacting. He will know that the rules are that the commissioner cannot refuse demonstrations; all he can do is set conditions. I think there have been three cases now where conditions have been set. Let me give one example: someone wanted to demonstrate by setting themselves alight outside No. 10; the commissioner, in his wisdom, thought that was not appropriate, so the condition is that they should not do so.

Lord Renton: My Lords, does the noble Baroness agree that Parliament Square is one of the most historic and elegant places in the United Kingdom and that the various placards placed there from time to time diminish its importance?

Baroness Scotland of Asthal: My Lords, I certainly agree with the noble Lord, Lord Renton, that it is one of the most elegant squares in the country—indeed, in the world—and we now have appropriate parliamentary provisions to deal with what some would say was the desecration of the square. But we have to balance issues and to work within the law, which we are currently seeking to do.

Lord Waddington: My Lords, would not the—

Lord Rooker: My Lords, we are into the eighth minute now.

Local Government: County Councils

Lord Kimball: asked Her Majesty's Government:
	Whether they support the retention of county councils.

Baroness Andrews: My Lords, the Government are engaged in a wide-ranging debate about the future of local government, including county councils. As part of that debate, we are discussing with local government the changes to local governance arrangements that it believes are needed. We will conclude the debate in the White Paper that we will publish later this year.

Lord Kimball: My Lords, I am quite certain that the noble Baroness is genuine in her reply, but could we see some positive action? Why go on spending £18 million on the unelected regional councils in eight areas? The money is used to override the county councils' planning decisions. The Government are taking powers away from the local people in all 34 counties and they will have to pay for it through their council tax.

Baroness Andrews: My Lords, let me take the opportunity to say that no decision has been taken on local government reorganisation; it is still a very lively debate indeed. As to the noble Lord's supplementary question, there are functions which we believe can be best exercised at a regional level—planning functions, for example, which take into account the impact across a region and a sub-region of transport and housing. No powers have been taken away from local authorities in that sense, and I think that the 200 or so local Conservative councillors who serve on regional assemblies would very much support the work that they do.

Baroness Hanham: My Lords, when Ruth Kelly was appointed as Secretary of State for Communities and Local Government, the Prime Minister wrote:
	"I would like to see a radical, devolutionary White Paper".
	This White Paper has been heralded for some time. The noble Baroness has just said that it will appear later in the year. The last time I asked her this question, it was going to appear in July. Do we have any idea when the White Paper will be produced and what it will encompass? An enormous number of things are being discussed with regard to structure. How much will be included?

Baroness Andrews: My Lords, the new Secretary of State has made it absolutely clear that she is as committed to our White Paper to improve local government as was her predecessor. David Miliband has extended the dialogue to many county councils, district councils and chief executives, and the dialogue continues. The noble Baroness would not expect a new Secretary of State to rush into making a decision or giving a timetable before she has had time to continue the dialogue and consider the options. So while we do not have a timetable, there is complete certainty that we will have a White Paper.

Lord Greaves: My Lords, I remind the House that I am a member of a local authority in Lancashire which is one of those areas, if rumours are to be believed, where the Government are intent on imposing a costly and disruptive local government reorganisation which will, as far as one can see, do nothing to improve services. Would it not be better for the Government to concentrate more on sorting out some of their own departments, such as the Home Office and Defra, which appear to be suffering from endemic, shambolic inefficiency, than on imposing this rather Maoist concept of permanent revolution and permanent reorganisation on everybody else?

Baroness Andrews: That is rather strong language, my Lords. I shall be rather boring and say, once again, that no decision has been taken about the restructuring of local government. I will say, however, that this is not a conspiracy in any sense to impose anything on local authorities; it is not a conspiracy to abolish counties or districts. It is about creating better services for the future. It is a dialogue in which we have complete unanimity with our local government partners. We want local government to be fit; we want it to be more transparent so that people understand what it does and are more likely to vote for it. We want it to deliver the sort of services that meet the challenges of, say, an ageing population or climate change.

Lord Harris of Haringey: My Lords, is it not the case that whenever local government reorganisation is proposed, the county councils mount a vigorous defence of their existing powers, duties and responsibilities. I hope that my noble friend will agree that in any future changes in the structure of local government, the principle must be what will deliver most effectively the best services for local communities.

Baroness Andrews: Yes, my Lords, that is absolutely right. There are a number of views on the value of two-tier authorities. Some are very effective and some less so, partnership is more difficult, and so on. We are looking at this debate objectively and listening extremely closely to what people are saying. It has been and will continue to be a very wide debate.

Lord Dixon-Smith: My Lords, the noble Baroness will not be aware that I once served on a body called the south-east regional economic planning council. When the time came for that body to be abolished, I have to say that nobody noticed its passing. I suspect the same might apply to the regional structure that we have at present.
	For the 40 years that I have been involved in local government, we have been involved in a process of constant ferment as governments have tried to reform local government with a view to improving local services. I find it remarkable that the 40-year process has stopped. Has the Minister any idea how much money has been expended by local authorities not on providing services to their local community but on defending their structures and services for that entire period?

Baroness Andrews: My Lords, I am sure that Conservative Members would notice if the regional assemblies were abolished. Many of the changes that we have seen over the past 20 years have been driven by Conservative Administrations. We are not in the business of change for change's sake. There is an argument about the best way of reducing inequalities between regions—because there is no doubt that some of our regions are still lagging behind, just as some of our largest cities are lagging behind their European counterparts. That is the task that we have to address. We are using our partnership with local government to get it right.

Baroness Byford: My Lords, how does the Minister balance the concept of the Government trying to push governance and service provision as locally as possible with trying to do away with county councils, which are actually the nearest source compared with regional government?

Baroness Andrews: My Lords, we are not in the business of abolishing county councils. No decision has been taken about restructuring and any future shape. We all agree—I know that the party opposite agrees with me, as does the Local Government Association—that the more we can get decisions taken at local level in neighbourhoods by local agencies, the more effective it often is for local people. Local government is extremely committed to passing on power through local strategic partnerships, not least because it knows that the voluntary and statutory sectors can be more effective at that level.

Sudan: Darfur

Lord Alton of Liverpool: asked Her Majesty's Government:
	What are their current estimates of the total fatalities and numbers of displaced people in Darfur and what their assessment is of progress in ending the conflict.

Lord Triesman: My Lords, estimates of people killed in Darfur over the past three years range from 80,000 to 400,000, but no one knows and no one will ever know the real figure. More than 2 million people have been displaced, and a further 1.5 million have been affected by the conflict. Real progress has been made over the past month—indeed, over the past three weeks—in ending the conflict. Earlier this month, the Government of Sudan and the largest rebel movement signed the Darfur peace agreement, which is a major achievement. The United Kingdom has supported and will continue to support the peace process in every way that we can.

Lord Alton of Liverpool: My Lords, with as many as 400,000 people dead, 90 per cent of Darfur's villages razed to the ground, 2 million people now displaced and the killing and rape persisting while we speak, with attacks on humanitarian workers persisting, and World Food Programme rationing reduced to semi-starvation levels, is it not the case that Darfur is tragically still far from being at peace and that for far too many the truce is still a fiction while the continuing agony is all too real? How long will it be before anyone is brought to justice for these atrocities and how long will it be before Tuesday's Chapter 7 Security Council resolution on sanctions and the deployment of United Nations forces will be implemented?

Lord Triesman: My Lords, Darfur is still far from being at peace. In the period leading up to the ceasefire demanded by the Chapter 7 requirements of the United Nations Security Council there is evidence of people making their last efforts at a massive land grab as well. Violence has caused many difficulties in the past few days. However, our expectation is that the United Nations scoping work will now start immediately. Reinforcement of the AMIS mission for the interim period before blue-hatting is fully accomplished will be undertaken, and additional funds have been made available, not least by this Government. In our view, the United Nations forces should be in place as early in the autumn as possible, but certainly in the autumn, and the pledging requirements—there is unquestionably some pledging fatigue—are now very urgent, if we are to deal with the food shortages to which the noble Lord referred.

Lord Anderson of Swansea: My Lords, in spite of the welcome peace agreement of 5 May, limited as it is, and the UN Security Council resolution of 16 May, is it not shameful that the UN has talked, and the international community has discussed, but the killings have gone on and on in the province of Darfur? Will my noble friend confirm, as he has said, that the UN force will not be there before what he calls the autumn—the end of September at the very earliest—as the killings continue? What will be the mandate of the UN force that will replace that of the African Union? What will their numbers be? The 7,000 in EUFOR are totally inadequate. Will the force be adequately resourced?

Lord Triesman: My Lords, the mandate is still to be resolved. The Chapter 7 decision was taken only at the beginning of this week. I emphasise, however, that that itself, on a unanimous basis, is a most fundamental change in the circumstances now confronting Sudan generally and Darfur in particular. The numbers will be determined by the scoping operation. It would be senseless to declare a number or deploy those troops before people had gone and done the proper exercise.
	One thing is clear in my mind: the AMIS force must be given every opportunity to do the maximum it can to prevent further killing during the period before UN forces take over. We are funding AMIS, and we are committed to that.

Baroness Rawlings: My Lords, do Her Majesty's Government support Human Rights Watch's call for an end to attacks on humanitarian workers in Sudan, as mentioned by the noble Lord, Lord Alton, stating that such attacks and deliberate obstruction of humanitarian assistance are war crimes? What do the Government plan to do to support these calls?

Lord Triesman: My Lords, we do regard them as such. The Chapter 7 resolution makes it clear that those who impede actively or in any other way the demands of the international community, which now have the force of international law, will be treated accordingly. We are insistent that the AMIS forces should be in a position to protect humanitarian convoys, which, as we know, generally travel in soft-sided vehicles and are vulnerable. I have been alongside some of those patrols, and I know they are vulnerable. The reality is that the military effort has to step up, and all of the contending and warring parties have to obey this international directive. We must insist and ensure that we play the fullest role in making that happen.

Baroness Tonge: My Lords—

The Lord Bishop of Salisbury: My Lords—

Lord Rooker: It is the turn of the Lib Dems.

Baroness Tonge: My Lords, I thank the noble Lord.

Noble Lords: Bishop!

The Lord Bishop of Salisbury: My Lords, the tragedy in Darfur has escalated. Does the Minister agree that it would be a tragedy if south West Equatoria, now substantially destabilised from the relative peace of two years ago by the activities of the LRA, the Lord's Resistance Army, were to go the same way as Darfur? Can he tell us what plans Her Majesty's Government have for supporting the work of the UN in this area before it, too, escalates to the size and scale of Darfur?

Lord Triesman: My Lords, the contending forces, including the LRA, are on nothing like the scale of the Darfur conflict. We are supportive of the MONUC mission in the Democratic Republic of Congo. We are supportive in southern Uganda of all reasonable efforts to trap and bring to justice the leaders of the LRA, and I have no doubt that we will continue in those efforts that have been explored in recent debates in your Lordships' House.

Baroness Tonge: My Lords, the Minister will know that the terrible and tragic events in Darfur were originally triggered by the activities of the Sudan Liberation Movement and the Justice and Equality Movement, factions of which are now obstructing the peace agreement. They felt they were not getting a good deal from that north-south peace agreement. What steps is the international community taking to make sure that the same events are not going to unfold in eastern Sudan, where there has already been trouble?

Lord Triesman: My Lords, I do not wholly share the initial analysis. Those factions have been very disruptive, but Janjaweed elements have also been extraordinarily violent and disruptive. When you are there, it is hard to tell from the multiple uniforms and the variety of weapons, which almost everybody seems to have, who is in which force and why they are shooting at each other. But it is certainly clear that humanitarian efforts and demilitarising, peacekeeping efforts in the east of the country are now rising up through the sequence of priorities. We ourselves have people scoping that problem and how we can best assist in it.

Israel and Palestine

Lord Dykes: asked Her Majesty's Government:
	Whether they will make representations to the Government of Israel on the case for an early response to the proposal by the president of the Palestinian Authority for a resumption of direct negotiations.

Lord Triesman: My Lords, the quartet and the EU have both welcomed the commitment to negotiations of Israeli Prime Minister Olmert and the Palestinian President Mahmoud Abbas. We fully support this position of early engagement. We stand ready to help both parties to take the peace process forward. We remain committed to the principles of a negotiated solution and continue to work towards a just, viable and lasting peace.

Lord Dykes: My Lords, can the Minister explain why there is a delay on Israel's side? Unfortunately Israel, by not responding to President Mahmoud Abbas's very reasonable request, creates a sinister and unfortunate impression that it is much keener on illegally annexing the territory of Palestine between the 1967 line and the illegal barrier than on starting negotiations. In addition, more and more people in Israel would like these negotiations to start.

Lord Triesman: My Lords, the elections in Israel are very recent. The formation of the Government from among a significant number of parties is still more recent. Israeli Prime Minister Olmert is just about to undertake his first visit to the United States to try to make sure that there is some understanding among key players. I do not think that it is the moment to judge that Israel is unreasonably delaying. I hope that that is not the conclusion. I wish to quote one sentence from Premier Olmert, which I hope reflects his position at present:
	"The Government of Israel under my leadership prefers negotiations with a Palestinian Authority committed to the principles of the road map, which fights terror, dismantles terrorist organizations, abides by the rules of democracy and upholds, practically and thoroughly, all agreements which have thus far been signed with the state of Israel".
	That is the beginning of a negotiation on terms which we in the United Kingdom well understand, and we will urge that to happen as fast as possible.

Baroness Rawlings: My Lords, I hope that many of your Lordships listened to this year's outstanding BBC Reith lectures, with Daniel Barenboim. Does not the Minister agree that there are many positive projects which use culture to bring contact between people and encourage understanding, such as the Divan project that Barenboim started with Professor Edward Said? What steps are Her Majesty's Government taking to support grass-roots projects that foster a greater understanding, not only for negotiations but for co-existence for the next generation of Israelis and Palestinians?

Lord Triesman: My Lords, I completely agree with the noble Baroness that such contacts can be of great value. I have myself just been looking at the pattern of work that the British Council is undertaking with British government resources in the Palestinian areas and in Israel. There are some good signs, although there were, as noble Lords will recall, setbacks when the Gaza office of the British Council was attacked and ransacked. We are looking at how we can rebuild those facilities in a secure way.

Lord Turnberg: My Lords, Prime Minister Olmert and his Defence Minister have been saying for some time that they would like to open negotiations, provided, of course, that one of the preconditions is not the destruction of Israel. As an indication of that, has not Israel recently started to repay some of the withheld duties, increased shipments of medication and opened more trade barriers? Are those not indications of Israel's willingness to do business with the Palestinian people?

Lord Triesman: My Lords, there are mechanisms that the Israelis are looking at and are now acting on to ensure that sums go to the Palestinian people through humanitarian channels and without the risk of their being used for violent purposes. It is not only Prime Minister Olmert but President Mahmoud Abbas who has made some of the most clear-cut commitments to a peaceful negotiation, and he too deserves full credit for that.

Lord Hylton: My Lords, do the Government agree that the Arab League proposals could provide a useful starting point for work towards a two-state solution and the mutual recognition of all the neighbouring states?

Lord Triesman: My Lords, we have decided that the work being done by the quartet to produce two states, both contiguous and viable, is the best and most durable way of securing international support. It brings in the support not least of the Russians, and we would probably be foolish to shake that loose.

Lord Steel of Aikwood: My Lords, we must all wish the new Government of Israel well and recognise the difficulties created by the election of Hamas, but will Her Majesty's Government make it clear that unilateral policies, picking and choosing which settlements to retain on the West Bank, will not be recognised by the international community and, more importantly, would not lead to peace? Will they make it clear that there is no alternative but to pursue negotiations arriving at two equal states in that part of the world?

Lord Triesman: My Lords, I broadly agree with the noble Lord, although on occasions unilateral actions have moved things forward. The decision to withdraw from Gaza was a unilateral decision, and there is no doubt in my mind that it has been one of the more helpful decisions that have been taken. The international community is clear, and we are clear, that the final status positions must be negotiated. They will be agreed between parties, rather than imposed by one on another.

Northern Ireland (Miscellaneous Provisions) Bill

Brought from the Commons; read a first time, and ordered to be printed.

Business of the House: Debates Today

Lord Rooker: My Lords, I beg to move the Motion standing in the name of my noble friend on the Order Paper.
	Moved, That the debate on the Motion in the name of the Lord Blackwell set down for today shall be limited to two and a half hours and that in the name of the Lord Vinson to three hours.—(Lord Rooker.)

On Question, Motion agreed to.

EU Constitutional Treaty

Lord Blackwell: rose to call attention to the future of the treaty establishing a constitution for Europe; and to move for Papers.
	My Lords, I am grateful to those noble Lords who have put their names down to contribute to the debate—it is a distinguished list. The Motion is intended to reopen the debate about the future of the European constitution and the position that our Government will take towards that project. After the treaty establishing the constitution for Europe was rejected by the French and Dutch last year, the European Council meeting in June 2005 agreed to enter a period of pause and reflection. That period is now moving towards an end, with various proposals being put forward on how Europe will advance. The purpose of this debate is to discuss those options and, if possible, draw the Minister and the Government out on their preferred way forward.
	I remind the House that the treaty establishing the constitution was initially portrayed by the UK Government as a tidying up exercise in response to enlargement. It was clearly seen by others as a much more significant step forward in the European project, as evidenced by those countries' concern at how to progress without it. In reality, as we have discussed previously in this House, while much of the constitution may have been codifying past treaties, its significance was that it provided the cornerstone of a new legal and institutional order in Europe, which was based on Europe as a legal and political entity in its own right rather than as just a set of co-operative agreements.
	It contained, for example, a clear declaration that the commission saw itself as an executive arm of that European constitutional entity, responsible under the constitution directly to the citizens of Europe through the European Parliament rather than to the member states, and with a body of EU law that had primacy over national laws. It included a significant extension of so-called "shared competences", which covered most areas of domestic policy where the constitution states that national Parliaments could not legislate on any matter where the European Union decided that it had an interest in legislating. It also included a significant extension of competences to override national governments and parliaments on the basis of majority voting. It included the merging of justice, home affairs and foreign security into a single EU structure with the development of an EU foreign minister and embassies. It included the Charter of Fundamental Rights, layering a common legal framework and European Court of Justice competence over vast new areas of social policy and civil rights.
	As such, it was a critical step in taking forward the European project of ever-closer political union; a project that has only one direction and which is propelled forwards by the momentum of the institutional structure that we have already created. The constitution's significance is that it is no longer about pooling sovereignty on specific initiatives; it is about establishing a higher sovereignty that has superior rights to legislate and interpret laws across much of our national life. Outside the UK, there has never been a suggestion that it was anything else. For example, Mr Prodi declared at the time that the constitution was,
	"a big change from the basic concept of nation states. It's a change of centuries".
	The Belgian Prime Minister, Mr Verhofstadt, set out his view. He stated:
	"The conventions draft is quite rightly accorded the title of a constitution. It is more than a treaty, it is the capstone of a federal state".
	Having belatedly, although still not fully, acknowledged the significance of the constitution, the UK Government last year promised a referendum before those changes were ratified. I, for one, would have argued that the UK should have said no, as, I believe, the vast majority of the British people would have said no—as did, let us not forget, the French and the Dutch people. But the Government backed away from asking the people to endorse a treaty that the Prime Minster had signed under the cover of this "pause for reflection". But the constitution is now back on the agenda.
	One possibility is that the whole constitution will be revived, possibly with additions to make it even more of a social charter to mollify the French and others. Chancellor Merkel, for example, said last week that Germany would put reviving the constitution at the top of its priorities when it takes over the presidency next year. Describing the no votes last year as a just a "setback", she said:
	"I absolutely want this constitutional treaty . . . we need a constitution to have a Europe that has the power to act".
	Noble Lords should note that phrase—
	"to have a Europe that has the power to act".
	And for the Commission, José Barroso has called for a "political declaration" on the future of the EU at the summit in May next year as a way of launching,
	"a process designed to lead to a future institutional settlement".
	But as discussions continue as to whether and how to bring back the whole constitution, and despite the pause for reflection, it is clear that many of the provisions of the constitutional treaty are being carried through anyway by stretching the elastic of the existing treaty base. For example, EU residencies—embassies in all but name—are being set up and staffed around the world, many of them in expensive properties. Under what authority is that being done? The Commission has built the Charter of Fundamental Rights into all new legislation, and the European Court of Justice is making judgements on the basis of a political declaration, despite it never having been approved by the UK Parliament. How can a political declaration, signed by the Prime Minister but never approved by Parliament, be imposed as a new legal framework on UK citizens? As recently as last week, it was suggested that countries should give up their veto on justice and home affairs and move those matters into areas of EU legislation by majority voting—a proposal which the UK Government are reported not to be opposing; although I would welcome hearing a different view from the Minister today.
	So, one way or the other, the momentum of the European project carries forward—for example, under the guise of Article 308 of the existing treaty establishing the European Community, which gives the European Union power to extend action in areas necessary for the operation of the common market where those actions are not explicitly provided for in the treaty. In practice, this is being used as a gateway to bring through a whole range of new European powers. It seems to me that the operation of the common market is a pretty dubious legal base on which to justify, for example, setting up a European Union fundamental rights agency.
	Yet, having been denied a referendum on the constitution, this continued movement towards political integration is not something to which the British people have given their consent; nor is it something that I believe is in their interests. The time is coming when we must ask the British Government to declare their hand and we must then give the British people a chance to say yes or no. For there is an alternative which better reflects our nation's future interests and prosperity. It does not mean turning our backs on Europe but it means opening our eyes and arms to the opportunities in the rest of the globe.
	Our initial objective in Europe was the opportunity to develop and expand free trade with our neighbours—free movement of goods and capital without barriers and protectionism—and, through trade, to learn to live together better in peace. Over time, even that economic benefit has been offset by the burdens of regulations, social costs and even import quotas that have been imposed on our economy under the mantra of the single market. I believe that those regulations and costs reflect an outdated 20th century European social model—the concept of somehow protecting European Union workers from the need to compete with the world.
	The truth is that our economic future now lies primarily outside the European Union. With the advent of 21st-century communications and globalised business systems, the world economy is simply no longer divided into isolated geographic blocks. Nor are the old economies of Europe the main source of growth. In the 21st century, countries such as India, China and Russia will be the biggest areas of growth and wealth creation. The European Union may account for about 50 per cent of our trade in goods and services but it is the other 50 per cent that reflects the fastest-growing economies. Britain, which is the fifth largest economy in the world now that China has moved into fourth place, is still, I believe, the third largest trading nation. We are a huge trading nation in our own right.
	Our need and opportunity is for Britain, with its long heritage of international trade, to take advantage of selling our skills and expertise around the world and to participate in its growth. Indeed, in the Commonwealth, we have a ready-made club of economies sharing a tremendous heritage of law, culture and mutual trust as the basis for a true 21st-century global network. A forward-looking, enlightened British government would surely seize the opportunity to put their passion, idealism and energy towards building this unique network of nations into a huge force for future world trade and development, rather than relegating it to a passing reference in a backward-looking foreign policy fixated on the old order in Europe.
	Many advocates of European integration continue to argue that, unless we stay fully immersed in Europe, in the single market and indeed in the whole European project, British industry and British employment will lose out. Those arguments, if they ever had any weight, are no longer relevant. We are, and we have the right to remain, in the European Economic Area regardless of the EU treaties, and it is nonsense to suggest that it would be in the interests of other European countries to attempt to disrupt trade with Britain when their exports to us substantially exceed our exports to them.
	As we have rightly opted to stay outside the euro-zone, the doom and gloom arguments about losing foreign investment by not being part of the core European project have been demonstrably proved false. Just look at the City of London today, which accounts for an ever-increasing proportion of this nation's wealth creation from international markets. While there may be some benefit in having 9 per cent of the votes in agreeing common standards in Europe, our experience suggests that that is far outweighed by the costs of having to accept a whole raft of regulations that do not suit us without the chance to say no.
	It is now time to have a sensible discussion about whether our interests are best served by staying inside the single market regulatory obligations, or instead opting for a free trade relationship under EFTA, like the Swiss, where we can make a free choice about what regulations we adopt. For the City of London, for example, it is questionable whether the current process of regulating for a single market in financial services serves our interests, or whether it risks destroying the very flexibility and openness on which London's tradition as a world financial centre depends. There is a strong argument for allowing the FSA, rather than fighting a rear-guard action for British interests in Brussels, to be set free to define the regulations we want for London's international competitive position—a move which would bring strong pressure on the rest of Europe to follow our competitive lead.
	European trade represents less than 10 to 12 per cent of our economy in total, depending on how it is measured, but the regulations and costs it prescribes are imposed on our entire economy. Yet we risk being dragged back, losing our competitiveness, in order to maintain our position inside the European project. If we care about employment and prosperity, we should be focused on aligning our economy with the exciting growth economies of the future, not the outdated economies of the past.
	With our membership of the EU project, of course, comes our membership of the huge, immoral, bloated agricultural subsidy programme—the subject of the following debate. It is immoral because it places barriers on the way exports from poorer countries seek to earn their way in the world. It destroys their home markets and encourages overproduction, which damages our environment, rather than supporting environmentally friendly farming practices. Neither Switzerland nor Norway, under EFTA and the EEA respectively, have to put up with that.
	With our commitment to the EU project comes the imposition of a top-down centralist model of laws and governments in place of our ancient, democratic and legal conventions, sweeping away our ancient common-law rights and freedoms under English law, to be replaced by Roman-law rights that exist only where they are granted by the state. We should say to our neighbours, "You go down the route to political integration if you want to, but we will not join you. We will opt to maintain a free trade relationship with Europe. We seek to engage co-operatively on common programmes across Europe which are in our interests, whether they be on environmental protection, transport policy or security; but we will engage in those programmes on an inter-governmental basis where we retain control, not on the basis of handing over decision-making to an executive able to override our Parliament. We will opt out of all the institutional and legal trappings of the political integration project".
	It is wishful thinking to believe that that choice will go away; that the European project will stop in its tracks; that the rest of Europe will convert overnight to an Anglo-Saxon model of economic trade and competitiveness; or that the ECJ will stop advancing its jurisdiction voluntarily. The longer we take to be open with the British people about that choice, the more resentful they will rightly feel.
	I call upon the Government today to start being open about their intentions and, in closing, ask the Minister for specific responses on three questions. First, will the Government support or oppose Chancellor Merkel and others in her call to press forward with the European constitution? Secondly, will they support or oppose attempts to bring in many of the new powers and institutions set out in the constitution in a piecemeal way under existing treaties? Thirdly, if they do not commit to opposing either the full restoration of the constitution or its adoption by stealth, will they stand by their commitment to giving the British people a voice in a referendum where they can give or withhold their consent to Britain participating in continued European integration? I beg to move for Papers.

Lord Anderson of Swansea: My Lords, I congratulate the noble Lord, Lord Blackwell, on the timeliness of his Motion, but I was saddened not to hear even a word of praise for the European Union. There must be something right about the Union, but I fear that the subtext may have been that withdrawal is the preferred option.
	I will give some comments on the current state, at the end of a period of reflection. I shall talk about some of the options available, refer to President Barroso's important speech last week and look at a possible way forward. The key point is that we have come to a turning of the ways on the constitution. With France and the Netherlands, two founding countries, saying no even before we came to the more sceptical countries—Poland, the Czech Republic and ourselves—it is clear that the constitution as drafted, alas, is dead. We should proceed on that basis.
	I hear what Chancellor Merkel said in her first speech on European affairs to the Bundestag last week; she effectively said that, during the German presidency in the first six months of next year, the Germans were planning to give new momentum to the debate. That is unlikely, of course. There will be the French presidential elections at that time and, in my judgment, what she said refers more to the coalition pact between the CDU/CSU and the SPD than to the realities of the time. The fact is that even in France, as the Libération poll showed this week, 98 per cent of those who voted no said that they would confirm that decision if there were a referendum now. I think that the German proposal is unreal. I would only hope that the Germans would invite John Cleese, who appears apparently fairly regularly on German television in respect of the World Cup, to show his parrot sketch. The parrot is dead and the constitution is dead, and we should proceed on that basis.
	I will not go through the various options available because time would not permit, but a very helpful speech was given this week to the IPPR and the Friedrich-Ebert-Stiftung by the deputy leader of the SPD in the Bundestag. She said that the options include: the continuation of the ratification process; the renegotiation of the constitutional treaty plan B, if one wishes; the implementation of some institutional reforms, or cherry-picking; the various opt-out options; the removal of part 3 of the treaty, which I understand to be the option put forward by former President Giscard d'Estaing; the abandoning of part 3 altogether—or, as Premier Verhofstadt said in his pamphlet the United States of Europe, a pioneering, or core, group. For each of these options, there are obviously major drawbacks.
	Some interesting contributions were made last week, one by Chancellor Merkel to the Bundestag and another by President Barroso in his press conference on Europe Day and in a speech to the Future of Europe Group. Chancellor Merkel endorsed the constitutional treaty, saying that she and Germany wanted it, which begs the question whether a referendum on the eurozone or on the constitutional treaty would have succeeded in Germany. In my judgment, that is unreal. One should proceed on the basis that the constitution treaty was agreed—by consensus, yes—but is now dead.
	More interesting, in my judgment, is the speech given by President Barroso. He is not encumbered by a coalition agreement, as is Chancellor Merkel. He said:
	"But it is clear that there is as yet no consensus on the institutional settlement".
	Those words are very interesting. Throughout his speech, he did not say that the way forward was by a constitutional treaty; instead, he used the pregnant words, "institutional settlement". He said that we should answer the expectations of our citizens; that is surely the best way to create a climate in which the "institutional issues"—the same word—can be tackled. He went on to make other similar remarks.
	In my judgment, there appears to be some recognition in the Commission by the President that times have changed and that we need to reassess where we stand. I argue that in some areas we need to have more Europe and in other areas less Europe. We need to work this out on a consensual basis with our partners. The noble Lord mentioned justice and home affairs. Surely the problems of immigration, of migration generally and of organised crime that face our Europe are all part of a theme that demands greater intervention by us together as Europeans. We should also explore energy policy as Europeans. These are areas where Europe needs to work together more closely. In other areas, there is a case for less Europe. In her speech to the Bundestag, Chancellor Merkel said that 25 per cent of EU regulation should be taken off the backs of business. That may well be a proper theme for the German presidency in the first six months of next year. I think that the realistic approach is to move step by step, recognising that there is a European consensus on moving forward in certain areas, save among a band of Euro-sceptics whose real agenda is withdrawal in any event. It is worth working towards a European consensus in various ways.
	Finally, I shall observe that for me the most encouraging part of the Barroso speech was this: he talked about trying to look seriously at subsidiarity and at the role of national parliaments, which must become more involved in EU affairs. I commend for consideration his announcement:
	"First, the Commission wishes to transmit directly all new proposals and constitutional papers to national parliaments, inviting them to react so as to improve the process of policy formulation . . . Second that the Commission step up its political engagement with national parliaments".
	That is surely a new recognition that we should welcome. It challenges this House to re-examine the procedures in this Parliament and it is part of a realistic package to reconnect and move forward on the basis of a citizens' Europe, not a bureaucrats' Europe.

Lord Maclennan of Rogart: My Lords, I welcome the initiation of this debate by the noble Lord, Lord Blackwell. It is timely, and it is of great value to hear so articulately presented the case for disengagement from the European Union. He couched his case in such clear and, indeed, stark terms that it would be followed by a remarkably small proportion of those people who are engaged in working with Europe or in business in the context of Europe since it would be clear to most of them that the course he commended would render us on the outside, an offshore island with very little leverage to influence the decision making of the countries with which we do, as he admitted, the bulk of our business today.
	In response to the speech of the noble Lord, Lord Anderson, I think he would do well to recognise that the constitutional treaty was not only initiated by all the then member governments in the Laeken declaration, speaking as representatives of their own countries in the council, but was approved and signed by all 25 member governments. That is a measure of support for the work done by the convention—of which I had the honour to be a member—as least as far as concerns its identification of the issues that were apt for consideration at that time. I do not believe that the referendums in France and the Netherlands have entirely altered the perception of the European peoples of the necessity of the European Union. Indeed, post-referendum surveys of opinion showed that 88 per cent of the population in France and 82 per cent of the population in the Netherlands were positive about the working of the European Union, not on the precise formulations of the treaty.
	Many explanations have been offered of why the treaty was rejected in both those countries. It is obvious to those of us who watched what was happening and, indeed, to those who marginally participated in it, that in the Netherlands no case whatever was made by the Government for the adoption of the treaty. No explanations were offered, and the Government took the view that they should allow by some sort of process of osmosis the truth of the treaty to emerge in the consciousness of the voters. With the benefit of hindsight, I think we can suggest that that was not a very sensible approach.
	France is also at the end of a long period of somewhat discredited government. Those of us who know how referenda work are conscious that votes are not always cast on the precise issues that are before the electorate. But I think it is clear that there were concerns in France about the treaty, probably most of all—something to which again the noble Lord, Lord Anderson, referred—the sense that a sufficiently social Europe was not being predicated in the treaty.
	None the less, the ratification by the fifteenth member state of the Union—Estonia—last week indicates that there is still a groundswell of positive approval. We understand that it is quite likely that Finland will become the sixteenth. Although it may well be that at the end of this period of reflection member states will take the view that they do not wish to advance to the citizens of Europe the treaty in precisely the form in which it was cast and to which they have already given their assent, much of the underlying perceptions should be reflected in any new settlement. I suggest to the noble Lord, Lord Anderson, that the settlement has to be a legal settlement, which can be given effect to by the institutions of the European Union; and how otherwise, I ask, than by a treaty?
	The reality, which is at least as powerful as the rejections in France and the Netherlands, is an awareness in the European Union that globalisation is either a threat or an opportunity. For many it is a threat to jobs and to the competitiveness of the European countries. It is not at all surprising that there is still a strong underlying sense that nations in Europe should group together and reach conclusions which enable them to be at least equal players in the world in which China and India will increasingly play a large part. I must say that I found the implication—perhaps it was more than an implication—the assertion made by the noble Lord, Lord Blackwell, that we, the British, should somehow or other align ourselves with China and India in our new relationships flies in the face of reality. We shall be gobbled up alive if we do not associate ourselves with those countries which are comparable to us in their commitment to democracy and to the well-being of their citizens and with a common understanding about human rights and justice.
	The great danger for the Union at this time is not so much the specific rejection of the treaty, although it has not been finally rejected, but that it may not be capable of delivering with its present decision-making processes. There is a lot of optimism around that the Lisbon process, following the recommendations of Wim Kok, can be somehow or other recharged; that we need not alter the balance of power between the institutions; and that all the nations need to do is to strap themselves up and recognise the virtue of these objectives of the free market. That seems to me to overlook greatly the necessary role of legislation in giving effect to these overriding goals.
	Another sphere of policy is the commitment to and awareness of the need for an energy policy. We have had Green Papers calling for transparency, observation points and the like, but we have not yet had anything that suggests that the Union might be capable of being effective.
	To conclude, on the point about the Union's ineffectiveness, I draw attention to the extremely current concerns about immigration. Despite having transferred responsibility from Pillar 1 to Pillar 3 on immigration, the constitutional arrangements do not allow the decisions to be taken that need to be taken. I really do think that, in this period of reflection, we must aim for an agreement to give greater power to the Union's institutions to act democratically where there is agreement on the common interests of the member states, and to entrust the Union's institutions with that power to get on with the job.

Lord Hannay of Chiswick: My Lords, when I first saw the Motion on the Order Paper for today, I rather thought that the noble Lord, Lord Blackwell, would emulate Mark Anthony; he would be here to bury Caesar, not to praise him. He has not disappointed me. My own inclination would be rather the contrary, but I will resist the temptation to dwell at length on the merits of the constitutional treaty. Nor will I spend a lot of time speculating on the state of the corpse, if corpse it truly be. To change the literary metaphor, I am struck by the resemblance of those who anxiously question whether the treaty is really, really dead to the characters in Dracula who visit a graveyard and disinter bodies in order to drive a stake through their hearts.
	It is more useful to consider the future of institutional change in the European Union. For that reason, I thank the noble Lord for the opportunity he has provided. To avoid any misunderstanding, I should make it clear that I do not believe that there is any chance at all of the constitutional treaty, which was signed at Rome in November 2004 by 25 member states and since ratified by most of them, ever entering into force. There is not the slightest sign of either the French or Dutch Governments, whose electorates rejected the treaty by substantial majorities, being willing to resubmit the text for approval, or of their electorates being prepared to do so if it was so submitted. Nor do I believe that those member states that are still moving ahead with ratification or are pressing the case for completing the process actually expect the treaty as such ever to enter into force. Rather, they are trying to establish a benchmark against which to test alternative ways of bringing about institutional change.
	Let us turn away from necrophilia or necrophobia and look at the future in practical terms. First, I shall make one or two negative points. I suggest that it would be a great mistake if the European Union were to plunge prematurely into a new institutional negotiation. There have been far too many of them in the recent past. That has confused and irritated the general public, who find these games of institutional tiddlywinks not much to their taste. The Union needs to get better at delivering practical benefits from its policies, and to find a way back on to the path of economic growth and prosperity that brought it such strong support in earlier decades, before returning to the institutional issue.
	Secondly, I suggest that the Union should eschew tidying-up exercises. These matter a lot to civil servants and lawyers, but less to politicians and electorates who are suspicious of them. Thirdly, it should avoid confusing hyperbole. The treaty was a treaty and not a constitution. It was called a constitution to please those who wished it had been one. It ended by satisfying neither those who wanted one nor those who are determined not to have one. The title became a liability and surely should not be revived. Fourthly, I suggest that the Union should not risk creating legal confusion, as the charter of rights could have done, shrouded as it was in so much ambiguity about its justiciability or lack of it.
	Meanwhile, it is important for the Union to introduce institutional changes when these are intrinsically justifiable and are acceptable to the governments of member states while acting within the existing treaties. Such changes would include the holding of legislative sessions of the Council in public and the introduction of a subsidiarity test involving national parliaments. I do not see why they should not also involve inviting Javier Solana, the High Representative for common foreign and security policy, to chair meetings of the External Relations Council, and rationalising some of the external representation of the Union in places where both the Commission and the Council have overseas missions or where both Community and CFSB functions need to be carried out.
	There are objections to this kind of pragmatic process from both sides of the argument. Sceptics want everything frozen as it is; maximalists fear that their ambitious projects will wither on the vine if more practical steps are taken. I find both arguments unconvincing and difficult to reconcile with any genuine desire to see the Union become more effective and successful. But institutional change requiring treaty amendment will, in due course, be needed, because no body such as the Union can hope to develop and survive without the capacity to adapt itself to changed circumstances and new challenges. It will be needed because any further enlargement beyond the accession of Romania and Bulgaria will necessitate it in legal terms.
	The distribution of votes in the Council and the size of the Commission will have to be adjusted, by law. Beyond that, the anomaly of rotating presidencies will become more marked. A system that provides for the governance of almost every European Union body by a group involving nearly 30 members will become ever less defensible, and the need to ensure that matters requiring a unanimous decision are reduced to a genuine minimum will become more pressing. Since all sides of the House support the further enlargement of the Union, and since the negotiations for Croatia's accession could well be completed relatively quickly, that should concentrate our minds powerfully.
	Then of course the issue will arise for us, as for other member states, as to whether any such institutional changes should require to be approved by referendum, or whether they should be ratified in a way that a whole series of previous institutional changes were, several of them a good deal more ambitious and far-reaching than those ones are likely to be, and approved by parliamentary decision.
	The supporters of decision by referendum like to argue that their position is a principled one, but I have noticed that when the idea of a Europe-wide referendum is mentioned, their enthusiasm evaporates rapidly. Could it possibly be that their position is determined more by their calculation of the probable outcome than by attachment to a particular constitutional practice? That certainly seems to have been the case with the French decision to require a referendum before ratifying any more accession treaties after that with Croatia.
	It would surely be a good thing for this country if the demise of the constitutional treaty, which for all its shortcomings I personally regret, could enable us to have a more dispassionate and analytical public debate on these matters than has hitherto been the case. If the noble Lord's initiative today opens the way to such a debate, that will be a major advance. Europe is currently suffering from a leadership deficit, and I would hope that Britain would play a role in remedying that; but we shall not succeed in doing so as long as divisions between and within the main parties in this country act like a ball and chain around the ankle of whoever is the Prime Minister of the day.

Lord Tomlinson: My Lords, I, too, thank the noble Lord, Lord Blackwell, for giving us the opportunity for this debate. I follow on from where the noble Lord, Lord Hannay, began. If the noble Lord, Lord Blackwell, was here to bury the convention rather than to praise it, he only half-succeeded. He certainly did not praise it but he failed dismally as an undertaker.
	The convention process itself, in which I together with the noble Lord, Lord Maclennan, had the privilege of representing your Lordships' House, was a broadly good process that produced a broadly good result. It was a result that the vast majority of national parliamentarians in the convention were able to sign. Of course, I can make criticisms of it. Some criticisms have already been made today. The title and the outcome of the convention were absurd. The length of the document was equally absurd, as was the incorporation of the European Charter of Fundamental Rights. But the result on the parts that really mattered, which was quite significant, was agreed by all heads of government and has already been ratified by the majority of parliaments.
	The draft treaty is no longer on the table, but many of the important parts are issues that, if they are not addressed in the context of the outcome of the convention, will have to be addressed individually. The noble Lord, Lord Hannay, has given an exhaustive list of those issues. I do not think that anyone can pretend that the Nice treaty is adequate for now. It is certainly not adequate for the enlargement being negotiated with Bulgaria and Romania, which the overwhelming majority of Members of your Lordships' House have already welcomed. If the enlargement process goes beyond that, the deficiencies of the Nice treaty will become ever more evident. Other issues can and need to be dealt with if we are to persuade citizens to support some of the changes, including, for example, the legislative role of the council and greater transparency.
	I want to concentrate on my concern about how we organise a framework for discussion: we had a very clear one arising from the Laeken declaration. It is no surprise to my noble friend Lord Grenfell, because I have told him very clearly, that I had some scepticism about the process that the European Parliament was behind promoting. The process was to be a one-off forum in Brussels for national parliamentarians and the European Parliament to have a discussion to see where we all stand. The intention at the conference was that the next one could be hosted by the Finnish Parliament, although the European Parliament would, as this time, provide all the facilities. So the "one-off" of everyone getting together has already begun a life of its own. The next one is planned. The European Parliament, as it controls the purse strings, will control the agenda and the dialogue, which leaves me with some doubts.
	Parts of the outcome of the forum were good. The contribution made by President Barroso was extremely good. He took up one of the themes that came out of the convention in relation to subsidiarity—the "yellow card". He said that of course it was not quite the yellow card and that,
	"Clearly, the early warning system proposed needs to have the force of a Treaty to come into being".
	But, as my noble friend Lord Anderson observed, his proposals were essentially for engaging national parliaments in an early warning system, which is exactly the outcome that the convention had sought. So, positive things have emerged.
	However, other things in that forum lead me to have serious doubts. Just as we can welcome what Barroso said, I also notice that the Austrian Green MEP, Mr Johannes Voggenhuber, suggested that in this process national governments would undermine the powers of the European Parliament. He said that there was strong criticism of the role to be played by national parliaments because they would wind up playing a stronger role in the EU legislative process. Voggenhuber's criticisms do not surprise me because I heard them all the way through the convention. But I would point out that he was one of the prime movers behind the European forum that took place in Brussels, so we have to be careful of some of the people we are having a dialogue with because they have a distinct agenda which is not necessarily one that we share.
	I want to mention particularly that, in the Brussels forum, extensive discussions were held on the system of future financing. While those discussions are important, during the convention I spent quite a lot of time and a not insubstantial amount of effort in the specialist working group on future financing defending the rights of national parliaments. One of the fundamental rights of national parliaments is to approve own resources decisions. I spent equal time and energy defending the rights of governments to require unanimity in financial and budgetary questions, and therefore I am a little hesitant when I see our rights potentially being put up as future hostages with discussions about new systems of own resources, direct taxes on energy and other forms of direct taxation. No one can agree them in that forum, but on an agenda they do become issues that appear to have common purpose. If there is to be a continuation of this sort of dialogue, we have to be much more insistent on knowing exactly what our national parliament line is before we appear to be complicit in a discussion which later on we may find we want totally to oppose because it is contrary to our interests both nationally and as a national parliament.
	I wanted to take this opportunity to express some scepticism about the process. I do not mind discussion, but we have to consider very carefully the agenda and what our role is within that agenda before we appear to have been swept along with someone else's agenda, which we later regret.

Lord Waddington: My Lords, I too thank my noble friend Lord Blackwell for initiating this debate. It sounds a paltry excuse, but I missed the Question tabled on 4 May by the noble Lord, Lord Pearson of Rannoch, on the EU External Action Service because I was waiting for the gas man. But I read the exchanges and, I might say, there seems to have been a lot of gassing but not much shedding of light. On that occasion I noticed that the noble Lord, Lord Tomlinson, complained that if noble Lords continued to ask the same Question, they would continue to get the same Answer. Some of us live in the hope that eventually we will get an Answer that makes sense. We will then lapse into silence, no doubt in a state of shock.
	On 23 April the Sunday Times ran a detailed account of how the Commission has been busy setting up in all but name the External Action Service, which is provided for in the constitution. It has been acquiring grand mansions in Moscow, Washington and throughout the world, and some are already housing people on the EU payroll who are, to all intents and purposes, ambassadors. One such is John Bruton, the former Irish Prime Minister. John Bruton, we read, is occupying as his residence a mansion in the Sheridan-Kalorama neighbourhood of Washington. Apparently it was built for a steel and railway tycoon in 1923 and has just been renovated at a cost of £1.4 million. We are told that it has 16 bedrooms, a grand dining room and a hall of polished marble—all equipped to entertain 150 guests. It has an Italianate garden complete with classical statues in bronze and a swimming pool.
	It is ridiculous to suggest that all this magnificence is for a trade mission like those that have been set up by the Commission over the years under its general powers. It is absurd to pretend that Mr Bruton is just the humble head of a trade mission, doing his best to persuade Americans to buy more champagne, cuckoo clocks and pasta machines. It is as plain as a pikestaff that while the External Action Service has not been formally set up, considerable sums of money are being spent now in preparation for its coming into existence, and people like John Bruton are bedding themselves down into the posts in which they will be installed formally if and when the constitution comes into force.
	As only the constitution makes provision for the External Action Service—and the constitution is not law—where, I ask, is the legal cover for this expenditure? As there plainly is none, have the Government complained to the Commission about its illegality? If not, why not?
	Finally on this point, will the Minister tell the House how much this so-called trade mission to beat all trade missions is costing us in Britain and what are we getting for our money? Are not Britain's trade interests in the US already well represented? Have we not staff to promote trade, not only in Washington but in New York, Los Angeles, San Francisco, Chicago, Boston, Houston, Atlanta and Denver? I repeat: what is it costing us and what are we getting for our money?
	Perhaps I may now turn briefly to the Charter of Fundamental Rights, which also was to be given legal effect when the constitution was ratified. The constitution—surprise, surprise—has not been ratified, but the charter is already being given legal effect. Of that there is no doubt whatever. The EU has issued an edict, DOC COM (2005) 172, which requires the Charter of Fundamental Rights to be enshrined in all new legislation. If that is not implementing the constitution by the back door, I am a Dutchman.
	The matter does not end there. In 1997—I am not a Dutchman—the EU set up a monitoring centre on racism and xenophobia in Vienna. Last summer, that body was suddenly converted into the EU Agency for Fundamental Rights. One does not have to be Einstein to understand why that happened and why it happened just then. It happened, of course, because the member states had agreed on a Charter of Fundamental Rights and had also agreed, at the same time, that there should be an Agency for Fundamental Rights to monitor its operation.
	The Government have played a direct part in all this. The agency was established, as my noble friend said, by the use of Article 308 of the Treaty Establishing the European Community—and Article 308 can only be used if there is unanimity. Why did the Government agree to the agency being set up? Why did they agree when they were busy telling us that they would have nothing whatever to do with the implementation of the constitution by the back door? We are entitled to an explanation.
	Perhaps I may finally say a word about the role of the Prime Minister. After signing up to the constitution, he recommended it to the British people in the last general election, saying it was good for Britain and good for the new Europe. But at St Antony's College, Oxford, in February this year, Mr Blair was singing a very different tune and telling his audience that the constitution was not so hot after all. It failed, he said, to address the concerns of European citizens. The drive for more institutional integration had become,
	"almost self-perpetuating and certainly self-absorbing".
	The EU, he said, had put "a political decision" before getting the economy right. No one knew what the constitution was meant to solve. Europe, unable to solve its actual problems, had taken to solving imaginary ones by regulations no one wanted and which were implemented in ways which everyone hated. Those are all passages from the speech made by the Prime Minister. Can we please hope that for the rest of his term in office, Mr Blair does not sign first and think afterwards?
	I object to the constitution being introduced by the back door, but implementation by the front door would be infinitely worse. I simply do not understand those who argue that the constitutional treaty is just like any other treaty and there is not really a constitution at all. If this treaty is ratified—and I sincerely hope that it will not be—a constitution will come into existence which will have this effect: the EU will cease to be a collection of states that have chosen to share sovereignty over agreed aspects of their affairs. Thenceforward, the EU will derive its powers not from the treaties but from a constitution with its own authority. The EU will become a legal entity in its own right.
	When we joined the EEC, we accepted the primacy of EU laws over the laws of member states. But Article 1.5 of the constitution states:
	"The Constitution shall have primacy over the laws of the member states"—
	the constitution, not just such laws as may be agreed by the Council of Ministers—and that the constitution will be interpreted by the court to make the people of Europe "united ever more closely". That is why we must never adopt this or any other constitution for Europe.

Lord Dykes: My Lords, we are still talking in this debate about constitutional treaties, but I agree—although for different reasons—that the irony of the Realpolitik around the Blair comments on the idea of the treaty and then a referendum still amazes some observers and journalists. The Tories had originally, of course, refused a referendum on Maastricht, in my view quite rightly, and Tony Blair said that it was not necessary for the new treaty as well—unlike for the euro, on which he then broke his solemn pledge to campaign hard to appease an incompetent, nationalistic and power-hungry British Treasury and the increasingly tedious Chancellor.
	Blair then changed his mind abruptly on TV—as he did with fox hunting, you will remember—presumably responding poodle-like to tabloid newspaper pressures. This, in turn, produced gigantic pressure on President Chirac, who was unhappy about a referendum as long as the Council of State, and perhaps also the Constitutional Court in France, said that it was okay for both Houses to vote it as a treaty. With high unemployment and an unpopular French Raffarin Government, the result was a fairly narrow non. This is what happens when the balance in the Union between the collective good and nationalism in each state is distorted by press hyperbole, the foolish remoteness from the people of the EU institutions and a degree of pusillanimous reaction by national politicians.
	However, it was not only that. The treaty document was, as has been said, long-winded, tedious, pompous and looked like a Ecole Nationale d'Administration working lecture document, thanks to the insouciance of Giscard d'Estaing—and, indeed, we should mention the noble Lord, Lord Kerr, in this context as well. Any new text in the future must focus on homespun common-sense truths about the need for modern 20th-century machinery to ensure that the Union functions smoothly and efficiently.
	Most citizens of most member states, I believe, are in favour of the European Community family acting in concert—indeed, with daring majority voting sometimes when required—when a Union-wide policy is the only route to success. This is, logically, covering more areas as time goes on.
	Europe is also a major part of the global village. Within this sub-global component, the whole EU—the citizens of the Union as well as national member states—want common-sense rules to permit them to live, work and enjoy life wherever they choose. This does not mean that they are not patriotic citizens of their own countries mostly—although for many wise people these notions do not have to be primordial all the time, I am glad to say—but they want a sensible, pragmatic, hedonistic Europe as well, with plenty of new jobs. They now need reassurance that the period of reflection will, at long last, produce an empirical solution to the processes of modernisation referred to by the Commission and in this debate.
	Meanwhile, well over half the member states have already ratified in accordance with their own national constitutional procedures, and the EU institutions are producing important suggestions, some of which have been mentioned today. The European Parliament had a very important, constructive debate in January and there have been some committee meetings of the Parliament since then, quite logically, rationally and justifiably, to elaborate ideas. The Commission has responded to the period of reflection with its own new communication last week on a citizens' agenda and Delivering Results for Europe. Meanwhile, even if it wants to go beyond 25 plus two in due course, the Union cannot enlarge further until these mechanistic and practical measures are sorted out. That is the practical reality that we must face.
	Moreover, as was stated at Hampton Court, the agenda last October included the development of the knowledge-based economy and the emphasis on jobs and growth. Even allowing for treaties and constitutional documents, that must be the priority. Some of it will, I am sure, be written into these texts in the future.
	Obviously something more than just a technical issue is arising. For instance, if it is eventually agreed that a modernised treaty document will be re-presented in due course—the European Parliament's suggestion is 2009—will this text then just be ratified by the remaining countries which have not yet agreed or does the whole thing have to be redone? I presume it might be the latter. How will it relate to the existing text ratified by 15 states so far? These are complex issues.
	Meanwhile, although inhibited by the absence of the operational leeway offered by full ratification by all, the Union has rightly not ceased to function, agreeing various important steps through the Council of Ministers and the European Council, scrutinised by each national parliament according to its own procedures. We have had the long-term budget to 2014; the relaunched agenda for jobs; a reformed stability and growth pact; co-ordinating measures on tackling international crime, drugs and pornography; the beginning of a common energy supply framework for all countries; and legislation on services respecting the countries of origin.
	As the latest document from the much-attacked Commission declares, Europe has to be democratic rather than just administrative. How we all manage to achieve that is the key, for we know the reality here. The Neanderthal creatures who hate the union of sovereign states working through agreed collective institutions and using qualified majority voting where needed—how daring, how terrible—are still a force in the UK, partly because of the pompous myth of our unique links to the USA. These dark souls, living in the caves of dotty nationalism at all costs up and down this otherwise enlightened country, are determined to fight to stop the Union having a proper democratic structure, alongside the robust parliamentary democracies represented in each member state. It suits them to leave the Commission and Council, and even the European Parliament to some extent, in a remote and overcomplicated state, not endorsed by well informed public support in the member states.
	Common ownership of the Union by the electorates everywhere is just as important as their ownership of these civic rights and duties in each member state. In some ways, it is more important because this is still the formative stage of some important common policies in the European Union. These ideas and policies all subsist in the original Treaty of Rome, and Maastricht itself was merely a reinforcement of those realities. These are simply continuous processes—nothing brand new and sinister has actually been proposed in this document.
	At least the Neanderthals, true to their lust for business and commerce at the expense of anything else, have always supported the single market, a piece of federalism if ever I saw one—the only segment where excitable Thatcherites insisted on the noble principle of majority voting at all costs.
	So to let the single market be the key to modernisation, just to please everyone, would be a rational suggestion. Let us ensure that single markets develop everywhere, not just in the standard economy and farming, but in all services: banking, mobile phones, airline travel, energy, insurance policies, mortgages—especially with often lower marketplace interest rates in the euro-zone.
	The Commission is launching its own fundamental review of what gaps remain in the single market. It will be up to the people of France and the Netherlands to be left in peace to decide how they will respond to these issues. They might conceivably decide to remain outside any new treaty proposals sanctified by 23 plus two. We shall see. Clever lawyers can argue the toss on that for a long time.
	If, for instance, the European Council decides unanimously that a new text should be offered eventually, the United Kingdom will presumably support that in view of all that has been debated, discussed and gnawed over ever since Blair welcomed a period of reflection, lasting for perhaps 50 to 100 years. As we all now know, other member states want to make reasonable haste.
	While the Commission scrupulously avoids pre-empting any outcome for treaty mark 2, a step-by-step approach may be the best way. Next year will be the 50th anniversary of the Treaty of Rome, which has brought so much to the people of Europe. Perhaps that would be the time to start.

Lord Pearson of Rannoch: My Lords, I congratulate my noble friend Lord Blackwell on his courage in holding this debate and on the clarity with which he introduced it. The last time we discussed our general relationship with the European Union was on 11 February 2004, so I thought I would take the opportunity to repeat some of the absolute basics of that relationship by way of background to the predicament in which we find ourselves over the proposed EU constitution. If you want to know where you are going, it usually helps to remember where you have been and from where you start.
	The first thing to recall is the big idea which gave birth to the project of European union and which, almost unbelievably, still underpins it today. That big idea was that the nation states had been responsible for the carnage of two world wars and for the long history of war in Europe. The nation states, with their unreliable democracy, therefore had to be emasculated and diluted into a new form of supranational government, run by a commission of wise and honest technocrats. That is why the unelected Commission still has the monopoly to propose EU legislation and to execute it once it has been through the Brussels system. That system is innately secretive and undemocratic. After the Commission has proposed a new law, it is negotiated in secret by the Committee of Permanent Representatives—COREPER—or bureaucrats from the member states. It is then decided in secret by the Council of Ministers, where the United Kingdom has some 8.5 per cent of the votes, after which it must be rubber-stamped by the House of Commons and your Lordships' House.
	The Commission also has the power to make regulations which have direct effect on the member states and do not even need to be rubber-stamped by their Parliaments. Disputes are settled by the Luxembourg court, against which there is no appeal. This is not a court of law as we understand that expression but, rather, the engine of European integration.
	The trouble is that a majority of our new law is now made under that system. The Government are being understandably coy about exactly what the proportion is, but the Germans have recently estimated that 80 per cent of all their new law since 1998 was decided in Brussels, and our own figure will not be very different.
	The heart of our democracy is the right of the British people to elect and dismiss those who make their laws, and so it has been betrayed by our membership of the European Union. Our party politics and general elections have become largely charades. The House of Commons and your Lordships' House have become largely redundant.
	It is worth remembering, too, that once an area of our national life has been ceded to Brussels, the treaties ordain that it cannot be returned to the authority of this Parliament. Furthermore, no changes can be made to the treaties unless they are unanimously agreed by all 25 member states in the Council of Ministers. That is why many of us fear that renegotiation of the treaties is not realistic, and why we believe that the only way out is the door.
	We say, too, that the EU has not kept the peace in Europe since 1945, because NATO did that. We point out that as a top-down amalgamation of different peoples, put together without their informed consent and patently lacking democratic legitimacy, it is more likely to end in conflict than in peace. Add to that cocktail the spice of endemic corruption, and the future of the European project looks worrying indeed.
	The other principal justification for the project of European union is that it is supposed to bring prosperity. This claim does not withstand any sort of examination either, certainly as far as the UK is concerned. As my noble friend Lord Blackwell said, only some 9 per cent of our economy trades with the EU, 11 per cent with the rest of the world, with 80 per cent staying in our domestic economy. Yet 100 per cent of our economy is bound by the diktats from Brussels, forcing the failed Franco-German social and labour model on to our internationalist economy and preventing us taking the free trading opportunities which the anglosphere and the new world order so obviously offer. Let us not forget that the European Commission, personified by our own inimitable Mr Mandelson, has the sole power to negotiate our foreign trade arrangements, and our needs are quite simply not the same as those of the countries of continental Europe.
	It remains clear, too, that we could leave the political construct of the EU and still maintain our free trade for the 9 per cent of our economy which trades with the single market. If only because we trade in deficit with it, it needs our trade more than we need its; we are its largest client, so on leaving, we could dictate our terms.
	It is also clear that our membership of the European Union has become hugely expensive for us. The Government stubbornly refuse to carry out any sort of cost benefit analysis, as we can see from our debates on 27 June 2003 and 11 February 2004, so the Euro-sceptic movement has commissioned a number of independent studies. These suggest that the current cost of our EU membership is anything between 4 per cent and 10 per cent of GDP, or £40 billion to £100 billion per annum. Somewhat ironically—and no doubt unwittingly—the Treasury produced a report entitled Global Europe last October, which includes several lost opportunity costs and puts the cost of our EU membership at some 28 per cent of GDP or £326 billion per annum, but I do not imagine that the Minister will defend that figure today.
	So that is some of the background as we contemplate the proposed EU constitution. I submit that that background leads us to conclude that the project of European union has so far been a disaster for this country and that the constitution in whatever form it is eventually adopted, can only make things worse. I fear that it is inconceivable that the project will voluntarily go into reverse by handing back any of our democracy or allowing us to deregulate independently. Far too many bureaucrats and second-rate politicians depend on the project for their bloated lifestyles and pensions for that to happen.
	Official Answers in your Lordships' House and in the European Parliament reveal that at least four major integrating initiatives are proceeding in the legal vacuum—the Charter of Fundamental Rights, the foreign service, which was mentioned by my noble friend Lord Waddington, the defence agency and the space programme; and to make matters worse, the Luxembourg court has also agreed that the EU has the power to interfere in our criminal law against the wishes of a large majority of the member states, including the UK.
	So the best thing for the people of Europe as opposed to its politicians and bureaucrats would be for the United Kingdom to leave the EU and pursue our interests in the wider world. That might start the project's disintegration, leaving the democracies of Europe to trade freely together linked through NATO. Once again, in that happy event, we will have saved ourselves by our endeavour and Europe by our example.

Lord Harrison: My Lords, I, too, would like to thank the noble Lord, Lord Blackwell, for beginning this debate but I would like to challenge some of the myths for which I think he is also responsible. Like the noble Lord, Lord Anderson, I think that there is a hidden agenda of wanting to leave the European Union. We should ask ourselves what would happen were the United Kingdom to do so. The very next day we would start negotiations again either with the European Union or with the other 24 or 26 countries within it to find satisfactory arrangements for a market.
	I asked the Norwegian ambassador recently whether it was a disadvantage for Norway to be outside the European Union and the single market. He said that there were at least four items that he could name where, had Norway had an influence on how the market was being composed, it would have been better for Norway. As for the fanciful idea of the noble Lord, Lord Blackwell, that we should somehow liberate the FSA, make it a free trade option and then London would dictate to the rest of Europe how financial services were accomplished, that is truly fanciful.
	The second myth that I would like to challenge is the one that the French and Dutch no was a no to the constitution. Incidentally, 15 countries have said yes to that constitution. The French vote was clearly anti-government and there were clearly concerns about globalisation, de-localisation and social protection. However, I should say to the Minister that I am not certain about Angela Merkel's proposal of including a statement on social protection as a way forward. It could open a Pandora's box of other countries wanting to intrude their own changes into the system.
	As for the Dutch, it may well have been a fear of loss of identity and in-migration. However, I hope your Lordships have had the opportunity to read the splendid reports by the Item club and also by the Joseph Rowntree Foundation, which acknowledged the wisdom of the United Kingdom Government in welcoming workers here immediately from the 10 accession countries. They computed that the interest rate has been kept down by 0.5 per cent, that these new workers are doing jobs that others will not do, that 33 per cent of them are actually not just in low-paid jobs but in business administration, that they have dispersed to all parts of the country thereby fulfilling the need for jobs and work elsewhere in the United Kingdom and, ultimately, they have been helping provide pensions for our older folk, because we need new, young, vibrant people to contribute to our economy over the coming years.
	It may well be that we would lose a referendum in the United Kingdom at the moment, but we should remind ourselves why that might be the case. We have had a deformed debate. The period of reflection has been more a period of deflection away from the issues. We have a problem with the press and the media. We have a splendid European Union Committee scrutiny system here in your Lordships' House, but too often those reports are disregarded. However, if we have an item on the agenda concerning the threats to the production of organ pipes in English churches, we get full publicity in the whole of the press. The fact that the directive is a good one, concerned about lead content, and that the issue is entirely overblown and taken out of proportion, skips by. We should not be guilty of contributing to muddying the waters of a proper debate.
	Why are some noble Lords against the constitution? We are told for instance that the constitution will simplify to a single text. The noble Lord, Lord Blackwell, said that it was described as a tidying-up exercise. Broadly speaking, I am in favour of tidying-up exercises if one of the results is that we have a simple text that is transparent. They also want to abandon the idea of having a president of council and not to abandon the six-month presidency. Adopting a president would give consistency, clarity and continuity—surely something again of benefit to the European Union.
	We were proposing to have a European Union foreign affairs Minister so that we do not punch below our weight, which is the case at the moment. We would introduce a new system of double majority voting, which would actually strengthen the opportunity for larger countries such as the United Kingdom. Why are the Euro-sceptics against that? QMV was to be extended to 15 new areas. That would be good news for British business, because it would mean that the veto could not be used by other countries against the United Kingdom in those vital areas of creating, establishing and extending the single market. Why are our colleagues opposite against the explicit provision to be able to withdraw from the European Union? Most important of all is the proposal that we, the national Parliament, should have a greater role through the subsidiarity mechanism, which is something that we pronounced on in our special European Union committee. That is also apparently to be set aside. What a strange business from the Opposition.
	What should we do? First, we should publicise and explain better exactly those ideas that are enshrined in the constitution, and make it part of a vibrant and proper debate. Then we should do what can be done without treaty change. That is sometimes described as cherry picking. I like cherries and I think that we should pick cherries from time to time. For example, if we could institute Council transparency, why not go ahead and do so? If we can reinstitute that idea of subsidiarity scrutiny which is done so well in your Lordships' House in an informal way, why not do so?
	Chancellor Merkel has provided an opportunity with the forthcoming German presidency beginning next year. She has said that she wants to persuade a sceptical public of the bonuses of jobs, housing and other items. That is where I arrive towards the end of my speech. Like the noble Lord, Lord Dykes, I believe the essential task of the European Union is to complete the single European market, the Lisbon agenda and items like the services directive, because that is the route to providing proper jobs and prosperity. I shall give one example that the noble Lord briefly mentioned. It has been computed by the London Economic Survey that if we were to have a mortgage credit market, it would be an advantage to the European Union, and therefore to consumers, of something like €91 billion.
	I heard the noble Lord, Lord Waddington, say that he was unable to attend a debate because he was waiting for the gas man. Here, too, the European Union can establish a proper energy market, not only for gas but also for oil and other items like wind power. Indeed, if he appreciates wind power from windmills, he can truly be proud of being a Dutchman.

Lord Brittan of Spennithorne: My Lords, I too welcome the opportunity provided by this debate. I speak as someone who welcomed the agreement on the constitution and supported it, and regret its rejection by France and the Netherlands.
	If you look at attitudes towards the constitution, there are two completely contrasting myths that cannot both be right. On the one hand there are those in the Euro-sceptic camp here who claim that this constitution would have forced the UK into a more centralised, dirigiste Europe. Had you crossed the Channel to France, you would have heard loud and clear, in the course of the debate on the constitution referendum, the argument that this was intolerable because it would have imposed an Anglo-Saxon social and economic model on those who did not want it.
	The truth is that both of those analyses were myths. They confused agreements about how decisions should be made with the direction in which the decisions should go. The reality was that the constitution would have made the changes to the running of the European Union needed to make the decision-making process operate at all smoothly in a greatly enlarged European Union. The noble Lord, Lord Hannay, has vividly described some of those. It would also have helped the EU to develop a more effective foreign and security policy and thereby play its proper part in world affairs.
	None the less, for whatever reasons, however mutually contradictory they may have been, two countries rejected the constitution. The question is what happens next. When that has happened in the past small changes have been negotiated, explanations and supplementary policy statements have been agreed, and new referenda have been held. That route is not open this time because the rejection in each of those countries took place not because of objections to specific clauses that could be changed but for much more general reasons.
	So what do you do? I do not think that the prospect of gradual implementation of the treaty by the back door, which some have feared, is either realistic for those who want it or something to be feared for those who do not. On the other hand, it seems completely illogical to say that something should not be done that can be done without a treaty, just because it is also referred to in the treaty. The example that is given most commonly and naturally in parliamentary discussion is the proposal to give the national parliaments a much greater say in the implementation of European legislation and in its discussion and debate. It is quite perverse to say that, just because that is referred to in the treaty, we should not agree to it if it is put forward outside the treaty, if it is in our interests and is something that we want.
	The suggestion that in a systematic way you should look to see which parts of the treaty are not controversial and implement those is a different matter. What is not controversial in one country will be highly controversial in another. That is not a realistic way forward. Nor do I consider a realistic process the proposal that has been put forward to divide the treaty into the institutional changes and the much longer part of the treaty that consists of the consolidation of previous treaties, to agree the former and have a new referendum on that. It will not meet the real concerns of the people in countries such as France and the Netherlands who voted against the constitution, and in other countries who might have done so if it had been put to the test.
	The right way forward is to seek to regain support for the whole European project and to produce practical benefits for the peoples of Europe from the process of working together in the context of the European Union. In the long run what will improve the EU's economic performance is economic reform. In the short term, as we have seen in France from the failure of the very modest labour reform that was proposed by the French Government, such reform is very unpopular.
	None the less it is a mistake to believe that progress cannot be made in the European Union. If you look at what is happening in Germany today, considerable progress has been made. The actions taken by the previous Schröder Government and the present Merkel Government in bringing about that reform are uncannily similar, although until they got together in a coalition each party was extremely reluctant to admit that.
	It does not matter from the point of view of Europe whether progress is made by individual decisions at different times and in different ways by national governments or by common Europe agreement. What is important is that progress should be made in this direction and Europe should move forward.
	There are some things that simply cannot be agreed and where progress cannot be made except on the basis of a European agreement. That applies above all to co-operation on immigration, crime and matters of that kind, which know no frontiers, and where without agreement at a European level we will simply not achieve the improvement in the quality of our lives that our citizens rightly want.
	Does that all mean that the constitution is not necessary? It means nothing of the kind; merely that it is not possible or feasible today. It does mean that the time will come when something similar to it will be required, and we will have to go back to these issues. It will not be same document and the same instrument as has been rejected in France and the Netherlands. Time moves on, and the thing was absolutely not faultless. But the issues will have to be addressed, for the reasons the noble Lord, Lord Hannay, gave, in the context of an enlargement that all political parties in this country have been enthusiastic in demanding. I am proud of the fact that we, whether in the Commission, in Parliament or in government, were at the fore of bringing about that enlargement. We should be at the fore of bringing about further enlargement in the future.
	We cannot wish to have the end without having the means. We have to face up to the reality that the institutions were creaking in every possible respect. This is not the first enlargement. We expanded and expanded, only tinkering at the edges. It is a shame that this constitution was called a constitution, because I agree that it really is not, any more or less than other treaties have been. It is actually slightly less radical than things like the Single European Act, which my noble friend Lady Thatcher encouraged this House and the other House to pass without referendum and with a three-line Whip. That was a very wise thing for her to do, and we have to realise, respect and understand that that wisdom was very great, and prevailed. We also have to recognise, however, that what this treaty is doing is much less than that. We will have to return to these issues, but not quite yet.

Lord Willoughby de Broke: My Lords, I too thank the noble Lord, Lord Blackwell, for introducing the debate so coherently and for putting so cogently the case for a new look at the way our relationship with Europe is to be established.
	If the EU and its leaders are well known for anything, it is their refusal to accept the results of democratic referendums. The Danes voted against the Maastricht Treaty in 1992 and were ordered to vote again until they got the answer right. The Irish voted against the Nice Treaty in 2000 and they too were told to go back to the polling booths and to stay there until they got the answer right. Last summer the French and the Dutch voters blew a large raspberry to the whole idea of the European Union and the constitution. That should have been that as far as the constitution went because it explicitly had to be ratified by all parliaments, and the Dutch and the French blew a hole in that. But, entirely true to form, the usual motley collection of Euro grandees simply could not accept the result. For example, just a few weeks ago, Mr Giscard d'Estaing put it like this:
	"The rejection of the constitution is a mistake that will have to be corrected".
	I was grateful to the noble Lord, Lord Maclennan, who invented a new Euro word—groundswell. If you lose the vote on the constitution, or any vote in a referendum, you can ignore that because you can say that there is a groundswell of feeling in Europe that you should go ahead with the project even if there have been votes against it.
	The noble Lord, Lord Harrison, was, I am afraid, at it again when he said that the relevant people were not really voting against the constitution, they were voting against Turkey perhaps or, as I think he mentioned, globalisation, or McDonald's or the colour of Mr Chirac's socks—anything but the questions that were on the ballot paper. The concept of a groundswell constitutes a mindset. Whatever the votes may indicate, the groundswell is there. That will become a new Euro word. It does not matter what happens or what the people say or think, we have the groundswell behind us. I like that. Obviously, the President of the Commission likes that too. He said:
	"People are asking for more Europe".
	That presumably means that he has not looked at his own Euro barometer polls, which show that support for the European Union is falling rapidly all over the place and is down to something like 30 to 32 per cent in this country. But, again, he possibly relies on the groundswell.
	The German Chancellor, Frau Merkel, was quoted as saying in an address to the Bundestag a week ago:
	"I want the constitution, the German Government wants the constitution, and I think the majority of this parliament want it too".
	The notable absentee, of course, from that list is the German people. They presumably will not be asked. They will be told that there is a groundswell of movement behind the constitution.
	I say to the noble Lord, Lord Anderson, who is not present, and to the noble Lord, Lord Hannay, who is, that the constitution is not dead at all; it is not even in intensive care. It has been in rehab and it is now undergoing physiotherapy. The "Eurocracy" is busy putting the constitution through. That is quite plain to anyone who has looked at the European papers and the work coming out of the Commission. They are pushing it through as hard as they possibly can, of course without the approval of national parliaments—that would be too democratic for words—but there is the groundswell behind them.
	The reality is that the EU is carrying on as though the constitution were ratified and as though the French and Dutch votes simply did not exist. All the institutions that needed the constitution to legitimise them are already either in place or are being put in place. A short list includes the EU space programme, the European Defence Agency, the common asylum policy, the external border agency, the fundamental rights agency and the EU external action agency. That body, as my noble friend Lord Waddington pointed out, comprises the so-called "ambassadors", who like to style themselves "Their Excellencies". On top of that we have the Charter of Fundamental Rights, which, as we now know, has to be enshrined in all EU legislation. We have been told that by the Commission, so we simply cannot argue with that. My noble friend Lord Waddington touched on the use of Article 308—and asked the Minister to comment on it, to which request I add my voice—to justify the introduction of those various offices.
	My noble friend Lord Pearson has tabled several Written Questions on that matter but the answers were not terribly convincing. Article 308 gives the Council of Ministers and the Community power to act where they feel it is necessary but—and this is the important thing, and I quote from the article—it gives the power only,
	"in the course of the operation of the Common Market"—
	nothing else. It is quite clear that the EU has been ignoring that particular proviso in Article 308. It is introducing objectives that have absolutely nothing whatever to do with the Common Market. I hope that, when he winds up, the Minister will reply to the point that both the noble Lord, Lord Waddington, and I have raised. It is extremely important to legitimise in some way these new agencies that should have died with the constitution, if the constitution is dead.
	Will the Minister please tell the House the Government's reaction to the introduction of EU-wide criminal law and sentencing? Last September the European Court of Justice ruled that the EU has the right to require EU states to introduce criminal laws to uphold EU legislation in combating pollution. That judgment was specific to pollution, but the Commission has gleefully seized on it as a pretext to enlarge its grasp on all other law. It has said that the principle will apply across all policies. I believe that it has already identified seven areas in which it intends to introduce legislation. That legislation will be decided by qualified majority voting. If or when Britain is outvoted under QMV, these laws and sentences, even though we disagree with them, will still have to be introduced through Parliament into our law. They will not be debated or voted on by our elected Parliament or by this House. Is that what the Government want? Is that what they agree with? If not, what do they propose to do about it?

Lord Bowness: My Lords, I too thank my noble friend Lord Blackwell for initiating this debate at a time when the period of reflection or apparent inactivity is coming to an end. I also congratulate him on his honesty in declaring his willingness to not only contemplate but perhaps look forward to life outside the European Union. However, what makes him think that the other 24 nations would leave us in a position of enjoying all the benefits but sharing none of the burdens, I really do not know.
	I would have supported the treaty had we had the proposed referendum, which decision was in itself a misguided act of political capitulation. In my opinion, nevertheless it is unrealistic to believe that the treaty as drafted is going anywhere. We are always reminded of the rejections but never the approvals. Is Luxembourg's referendum irrelevant because it is a small country? Although a majority of member states have approved the treaty, any attempt to change the outcome of the French and Dutch referendums would in my view be doomed to failure. Any new treaty in the foreseeable future would itself need the approval of all member states and would be likely to fall at a referendum fence somewhere in the Union. But if we are to take the rejection of the treaty by France and the Netherlands as a rejection of everything contained in the treaty, no progress will be made or reforms made, which are urgently needed.
	As well as repeating much of the existing treaties, the treaty contained a number of important changes which would have enhanced the ability of the Union to act effectively. What, then, is to be done? We are frequently told that the real issues facing the European Union are globalisation and competitiveness, not institutional change. Who doubts that? Certainly not the President of the Commission, who has made it clear that it must be a priority. But who is advocating powers being given to the Union to deliver the Lisbon agenda if the member states fail so to do? Reform of the budget is needed to deal with the CAP and increase funds for research and development. In the area of justice and home affairs there are recognised problems with terrorism, illegal immigration and organised crime. Do we still need to act unanimously under the existing treaties, or would we allow decisions to be taken, as the existing treaties permit, under qualified majority voting?
	Institutional problems will continue and will only be resolved with a treaty change. The Union is about to expand to 27. We have made it clear to the nations of the western Balkans that their future lies in the European Union. Should we be unable to keep faith with them, the effect might well be at best uncertain, or at worst disastrous for them and us. Until there is a treaty change, progress will only be made in the immediate future if we find ways of using the existing treaties to implement agreed areas of activity, as indicated by my noble friend Lord Brittan. We will not, as I understand it, be able to resolve the size and organisation of the Commission or easily resolve the problem of the rotating presidency, both of which the treaty addressed.
	We ought to be trying to achieve, where it is possible, and I acknowledge that it will not always be possible, a credible and well resourced strong European foreign policy. I am told that the European Union spends more on office cleaners than on CFSP, so we either have a very under-resourced foreign policy or extraordinarily clean offices, to say nothing of alleged embassies. We need someone to fulfil the role of the European Foreign Minister, or whatever title is given if there are sensitivities about that. We should be able to arrange our affairs to enable the high representative to fulfil, if not all, a large part of what was envisaged for the Foreign Minister role without treaty change. I submit that the Foreign Minister—or whatever he is called—will need the support of the envisaged external action service. That would have given support, but even without treaty change surely there must be opportunities for joint working between Council and Commission with the member states acting individually to achieve that support.
	There has been criticism of the European Commission representative offices in other countries. Your Lordships' House not long ago adopted a report of the European Union Committee on at least one occasion when it was said that the representative offices were under-resourced and ineffective. We cannot criticise them in one way and then in the other. What about the enhanced role for national parliaments? Is that to go out with the bathwater as well? We will be told by our opponents, as we have already been told, that we are seeking to introduce the treaty by the back door, but we will be told that whatever we do or do not do—witness the European Defence Agency, which was the subject of a new article in the treaty but is already in existence. It was set up by Council joint action on 12 July 2004 under an article of the existing treaty. That is the answer to the Question of the noble Lord, Lord Pearson, which he has tabled for after the Recess.

Lord Pearson of Rannoch: My Lords, Article 14 only allows action in specific situations; it does not allow a general policy.

Lord Bowness: My Lords, reference has also been made to the European Charter of Fundamental Rights, but that was directed specifically to the institutions of the European Union; it was proclaimed by the institutions of the Union and there are numerous safeguards of national laws and procedures in that document. The supremacy of European law has been referred to, but that is only in the areas of competence of the European Union, and that is not a new subject. Anyone who reads the debates that took place in your Lordships' House at the time that decisions were taken to apply for membership and subsequently join will see that that has ever been the case.
	We must learn from what has occurred. The treaty was called a constitution when it was not a constitution. The concept of sovereign member states was maintained throughout. Everything that has been achieved in Europe has been done voluntarily by actions and agreements taken by democratically elected governments, and references to "imposition" are inaccurate and unfortunate. If all this is to have any chance of success, political leaders must be prepared to lead. They must start talking about the European Union as if it is something to which we as a nation belong, an institution in which we are part of the decision-making process. They must stop taking the sole credit for the good things that have been agreed in the Council and stop blaming the EU, the Commission and Brussels for the unpopular decisions to which they have also been party. Our leaders must stop trying to outbid each other for the benediction of the Euro-sceptic press, and we should stop too frequently appearing to relish the political discomfort of some of our principal partners in the European Union. They must go out and be prepared to proclaim what the European Union has achieved, why it is important for our economy, peace and security, and why changes must happen if that is to continue.

Lord Wallace of Saltaire: My Lords, this has been an interesting debate. I always enjoy listening to the noble Lord, Lord Blackwell, who represents one of the most intelligent Euro-sceptic voices that we have. We need to debate much more actively what happens after the failure of the constitutional treaty and where we go from here. I regard the treaty as having been very much a curate's egg; good in parts, but too long, too detailed and too infected by the French concept of the European project. I do not intend to go into detail on what I would wish to rescue from it; I agree fundamentally with what the noble Lord, Lord Hannay, said on that.
	We must recognise that the death of the constitutional treaty is also the death of the old European project, and that is why we have such a crisis of national identity and national politics in France at present with, as the noble Lord, Lord Brittan, pointed out, a great deal of comment about the Anglo-Saxons having taken over and having won. This is a crisis of the French political elite, of the role of the French state in the economy, and of the protection of the French public sector against globalisation. One of the arguments for lifting the veto in a number of areas, including over the future of the Community budget, is precisely to lift the French veto against change, and that is one thing that the constitutional treaty would have done. There is also a crisis of national identity in Belgium, which is why Belgian prime ministers are always so fervently Euro-federalist, because of the problems in their own country. We saw in the Dutch referendum to some extent agonising over the Netherlands becoming a much less significant player within a much larger Europe. That was one of the undertones in their referendum debate.
	Let us recognise that we also have problems of national identity and of British values, which we cannot resolve until we also resolve our relationship with Europe. We heard from the noble Lord, Lord Blackwell, the voice of authentic unionism of 50 years ago or more. I cannot remember whether it was Ernest Bevin or Anthony Eden, or both, who talked about Britain having to choose between Europe and the open sea, and that Britain would always choose the open sea. There was a faint echo of Winston Churchill's A History of the English-Speaking Peoples in the noble Lord's references to the Commonwealth. I recall the debates of the 1950s, which I used to read about when I was a student—I was a boy at the time—in which it was said that this is a Protestant England, naturally free, facing a Catholic continent that is naturally authoritarian, dominated by hostile and conspiratorial France. The quotation by the noble Lord, Lord Pearson of Rannoch, echoes Prime Minister Pitt, remembering that Pitt knew that he was a European and that Britain played a role in European politics.
	We need a debate on British identity, history and values as part of reconciling ourselves to being European. In his excellent British Council lecture 18 months ago, the Chancellor of the Exchequer said, if I recall correctly, that the confusion over British national identity is part of what gets in the way of a reasonable relationship with our European neighbours. That, incidentally, is why I asked yesterday how the Government intend to consult on the question of what sort of British values and British history will be taught in British schools. There is clearly a great deal of confusion and a substantial gap among the parties and others on which we need to build a new consensus.
	We are now in a different Europe from where we were. The whole sense that Europe was dominated by France, conspiring against British interests, no longer relates to an EU of 15, let alone an EU of 25 or an EU that will expand to 30 or 32. British political leaders should be contributing to collective debate about the future balance of policies and institutional structures. Our world has not stood still; we are a long way from the British Commonwealth and Empire of the 1950s. We now need rapid economic growth across eastern Europe. Some of the speeches from the Conservative Benches struck me because they did not mention the rapid economic growth in eastern Europe. Car manufacturing in Britain is going not to China or Russia, but to Slovakia, Hungary and Poland. That is part of what is happening in Europe.
	The Daily Telegraph and Daily Mail sell large numbers of copies in Spain, Portugal and France to sceptical British who have retired there, but who, nevertheless, campaign to ensure that they get votes in local elections, according to the EU treaty. The pressures of immigration and of organised crime mean that we have an active interest in the success of the Spanish authorities in stemming the tide of illegal immigration from west Africa to the Canary islands and southern Spain. This country faces no direct threats, but the indirect threats that we share with our neighbours of the collapse of states in Africa lead to pressures—from asylum and immigration to drug smuggling in an uncontrolled Afghanistan. So we should be arguing within the European Union for continuing adjustment to both policies and institutions.
	To those who agree with the noble Lord, Lord Tomlinson, that we want more Europe on some issues and less on others, I say that we need more co-operation on foreign policy, defence and policing and less in the detail of the regulation of social policies or spending on agriculture. We need a different balance to the budget, which the constitutional treaty would have allowed us to achieve. We need a different Commission, a smaller college of commissioners and considerable further reform of the services of the Commission and its ethos. We need a different relationship between the European Parliament and national parliaments, as a number of noble Lords have said. I regret that some Members of the European Parliament, including one or two British Members, continue to resist allowing national parliaments to come in, as the noble Lord, Lord Tomlinson said. We need fewer vetoes on common policies among the 27 or 28 members if we are to pursue British interests effectively within that larger group.
	One of the greatest failures of this Labour Government has been that they have not led a debate either in Britain or on the Continent about where British interests and those of our European neighbours can best be combined. The Prime Minister came to office nine years ago promising to take Britain to the heart of Europe and to make the British people comfortable with our position in Europe. Sadly what we have had are infrequent speeches at home or abroad, nine Ministers for Europe—although the current Minister is on his second time around—no coherent or consistent overall policy and, in a number of areas, policies in which the British Government have led but have not wished us to know that they are leading. I suspect that the noble Lord, Lord Willoughby de Broke, does not know, for example, that the European Defence Agency was very much a British initiative, not a plot against the British, or that the British played an active and positive role in developing European security and defence policy—including the military staff in Brussels.
	As for our Conservative colleagues, the retreat to English nationalism and the reversal of the greatest achievement that Edward Heath made as Prime Minister is deeply regrettable. Even more regrettable is the retreat to the fringes of European party politics that the party is now attempting to negotiate. The suggestion that perhaps China and Russia are our future preferred partners, rather than France, the Netherlands, Denmark and others—not excluding Slovakia, the Czech Republic and Poland—seems a little odd.
	So we should reflect much more actively in public, at home, abroad and in other European member states. We should accept that the constitutional treaty is dead, but more efficient procedures for pursuing and managing common policies will nevertheless be needed in the British national interest. We should recognise that we share responsibility for failures of leadership within the European Union and that British politicians of all parties should be active in moving the debate forward. In that debate, we should be talking about British national interests and common European interests, and constructing common policies that serve all our interests together.

Lord Howell of Guildford: My Lords, I join others in warmly thanking my noble friend Lord Blackwell for his eloquent opening of this debate and, like the noble Lord, Lord Wallace of Saltaire, I have greatly enjoyed sitting here listening. I cannot say that truthfully about every debate—one usually says it untruthfully, but in this case it has been a most enjoyable experience.
	There have been highlights: I particularly enjoyed my noble friend Lord Waddington's description of the gloomy but vast accommodation that the diplomatic representatives of the EU are building for themselves in Washington and elsewhere; I liked the vision of the noble Lord, Lord Harrison, stepping out to pluck the juicy cherries that he will put in his basket and offer to us all; and I enjoyed, as always, although I do not always agree with, the interventions of the noble Lord, Lord Tomlinson. I loved how he said that the convention had been a great success; I was reminded of the surgeon who comes out of the operating room saying, "The operation was a great success but the patient died". That, I am afraid, is the analogy with the convention. Some of us said that the convention was the wrong approach to the needs of reforming and modernising Europe and would end in tears. It has ended in tears and the "c" word, the constitution, clearly was misleading, as my noble friend Lord Brittan rightly reminded us, and led people to think of the whole endeavour in the wrong way.
	So the debate was enjoyable, but the period of reflection is ending and it is right that your Lordships' House and other parliaments and assemblies throughout Europe should turn their minds to what happens next. Like many people, I have a problem in that the Government have said many contradictory things and I do not know what to believe, trust or rely on. The Prime Minister stated three years ago in Warsaw:
	"If the convention or IGC represented a fundamental change to the British constitution and to our system of parliamentary democracy, there would be a case for a referendum. But it doesn't".
	Many other Ministers spoke in even more virulent terms about the idea. Yet, along came the decision that there should be referendum. Later on, as my noble friend Lord Waddington reminded us, the same man, the Prime Minister, said that no one knew what the constitutional treaty was for. It is hard to put any trust in what government Ministers have said, are saying or are going to say about their intentions on this matter. I prefer to stick to the Laeken declaration, to which the noble Lord, Lord Maclennan, referred, which stated that the people of Europe were calling for,
	"a clear, open, effective and democratically controlled Community approach".
	Nothing like that came out of the convention, nor can we ignore the well made point by the respected Larry Seidentop in the Financial Times the other day. He stated:
	"Nothing is more likely to confirm suspicions that the EU has become an elitist adventure than ignoring the French and Dutch referendum results and pushing ahead with a constitutional treaty".
	There was much wisdom in that.
	My obvious conclusion is that the practical approach of the noble Lord, Lord Hannay, is right—as is so often the case with great officers and high officials of state who have worked hard on these matters. We must turn away from what, in the world of Laurel and Hardy, would have been called "another fine mess"—which is what the situation has turned out to be—and concentrate on practical issues for clearing up the mess, unravelling the damage caused by the wrong-headed approach to the convention, and see what is best for us and our neighbours in practical terms in organising the European neighbourhood and community, which we call the European Union. So I shall make my contribution as best as I can to those limited practical objectives.
	We say, quite simply, yes to clearer and smoother rules of governance for an enlarged European Union, provided that that enlarged Union is properly constrained in its ambitions. Obviously it requires different approaches: they were offered in the Nice Treaty but more changes will be needed.
	We say no to a further transfer of powers and more integration. On the contrary, we look for a transfer the other way—a reclaim of control and competences back to the nation state from the overloaded centre. Except in one respect, which I shall come to, there was no glimmer of any return or transfer of powers in the now collapsed constitutional treaty. If there is to be a new treaty document—perhaps it is coming—then, to the extent that it proposes a more significant transfer of powers, we would certainly require a referendum and we would like the Government's reassurance that that would be their position as well.
	Continuing my theme of "yes and no", we say no, as many people have done, to an unnecessary Charter of Fundamental Rights. We can see it causing exactly the same problems as have been caused by the, admittedly unrelated, European Convention on Human Rights—namely, that judges and higher courts begin making and applying laws quite different from anything proposed by Parliament. It must be right that Parliament makes the laws and judges dispense them. The further we drift from that principle, the greater the popular contempt for our national political process. We can see that happening now.
	We say yes to much more democracy in the European Union, which means making national parliaments the anchor of the Union. I think that that means a good deal more than the "yellow card" idea in the draft constitution, which we thought lacked the necessary bite and teeth, and it means more than just talking about subsidiarity. That was a well meaning concept but it was somewhat flawed in that the initiation of the process seemed to come from the top, whereas democrats would look for more input from the nation states.
	We say no to the constant obsession in Brussels with making the EU into a superpower bloc with its own foreign policy and its own fully fledged diplomatic corps. My noble friend Lord Waddington reminded us where that was going, as did several other noble Lords. Obviously we want practical co-operation on specific international issues—that is fine—but the proposition that this country's best interests are protected and promoted through our European partners just does not add up. It is absurd. I am sure that we could do far more for our international role and promoting and protecting our interests and far more to help our friends by giving the Commonwealth network a far higher priority in our foreign policy. I note in passing with the greatest regret that the latest departmental report from the Foreign and Commonwealth Office does not even mention the Commonwealth. There are pages and pages on the EU but the Commonwealth, all our connections and all the possibilities for this colossal potential network, containing most of the dynamic, fast-growing countries of the world, are neglected.
	To finish my list of yeses and noes, if new rules are to be drawn up, it would be yes to sensible neighbourhood and regional security arrangements, so long as they did not weaken NATO; no to the yearning for a legal personality, which is of course the old longing for the Rechtstaat; yes to lots of flexibility in co-operative arrangements between states; no to the two-speed Europe idea, because frankly we do not know what it is speeding towards; but it would be yes and yes again to extensive economic reform. Here, we obviously agree with the strong lead taken by the Chancellor of the Exchequer, Gordon Brown, but the exception that I would make to his observations is that endlessly revising the Lisbon agenda will not do the trick. The future vitality of Europe does not lie in top-down governmental solutions; it lies in the enterprise and innovation inside each state—at street level, so to speak.
	We obviously feel hobbled by the continuation of the large CAP, although, to be fair, there have been a considerable number of reforms, and we feel hobbled by the common fisheries policy, which ought to go. We see no gain in euro membership and wonder whether the Government now agree with people such as Professor Paul de Grauwe, the economic adviser to Mr Barroso, that,
	"there is a fundamental flaw in the design of the Euro".
	Perhaps we should all think about that.
	In the new global context with the rise of Asian power, we must be good Europeans but we cannot afford to be over-entangled with, and over-distracted by, local European affairs. Our interests and skills lie as much in our bilateral links with India, Japan, China and the transcontinental and multi-faith Commonwealth network as in our immediate geographical neighbours.
	We have always been good Europeans—perhaps the best in terms of our record and the sacrifices that we make—but, if the Europe that we want is to regain the trust and confidence of people, it will need to do much less and set itself much more modest aims. It will need to be less greedy for more powers, less centralised and less ambitious to be a super-bloc and to strut the world stage. That is not the way to make itself loved or useful to Europeans in their everyday life. If the leaders of the original constitutional convention had understood that, the European Union would be in a lot better shape today than it is. That is a lesson that we should all keep in our minds for the immediate future.

Lord Triesman: My Lords, it has been a serious and, as the noble Lord, Lord Howell, said, very enjoyable debate. I thank all those who have contributed to making it so good. I especially thank the noble Lord, Lord Blackwell, although, as I expect to make clear, I agreed with no part of his analysis. His speech was trumped only by those of the noble Lords, Lord Pearson and Lord Willoughby de Broke. More than anything, as I heard the noble Lord's speech, I was drawn to wonder whether he is in contact with Conservative Party policy on Europe or a harbinger of change to a harsher position. What he set out for Europe would amount to withdrawing from it pretty much now, and some of the other views put rather less trenchantly would have the same impact. The noble Lords, Lord Brittan and Lord Bowness, were obviously in a different place in understanding the importance of Europe.
	With the June European Council just weeks away, this is a good moment to set out the Government's position on the treaty and connected European issues. The Government consistently made it clear that the treaty represented a sensible approach for Britain and Europe. My noble friend Lord Tomlinson pointed out that, given the inadequacies of the Nice Treaty for these purposes, it was needed as a sensible set of rules for the operation of an enlarged and modernised European Union. Many of those elements were set out by the noble Lord, Lord Howell, just a few moments ago—for example, yes to smoother rules of governance. Sensible but modern arrangements should be introduced.
	The rejection of the EU constitutional treaty in 2005 by French and Dutch voters may have been a real surprise to some and a disappointment to those who worked on the Convention on the Future of Europe and in the negotiations. But the no votes are a reality check for everyone who believes that, in an enlarged EU of 25, we have to take account of reforms to the way that the EU does its business. I say to the noble Lord, Lord Dykes, and perhaps to one or two others, that there may be some wishful thinking that the non vote was a consequence of simple political errors and miscalculations or poor government polling. But I was there for part of the discussions in France, as, I know, were other noble Lords, and I heard people talking in bars about the services directive, the impact of globalisation and whether the treaty would or would not help to protect French interests in restaurants. It was a very lively and—let us acknowledge it—intelligent debate, even if it produced a result that was not to all our tastes.
	The noble Lord, Lord Brittan, is wholly right when he says that, in the mix of the description of what has happened, we are locked into a number of completely dissonant myths. That is absolutely true. It is worrying how such myths cling, but we must deal with the fact that they do.
	Following the no votes, it was agreed at last June's European Council that there would be a period of reflection to enable a broad debate on the treaty to take place. That was the sensible route to take. This June, the European Council will make an overall assessment of the national debates in member states and agree on how to proceed. We will participate constructively in those discussions.
	I emphasise that much of what I have to say is in broad agreement with what the noble Lord, Lord Hannay, has said. President Barroso was evidently right—as the noble Lords, Lord Anderson and Lord Bowness, said—that it is wholly unlikely that there will be a consensus on the way forward for the treaty in June. Nor will there be any serious prospect of consensus in the immediate future. I know of no serious commentator anticipating a serious discussion at any time before the French presidential elections at the earliest. None the less, there has been a good deal of discussion on the EU constitutional treaty among many people. We know from the polls, however, that this discussion is not reaching the hearts of what most people think Europe should be about: citizens' real concerns.
	People across Europe feel totally disconnected with this type of debate, certainly in the current circumstances, when they face many difficulties such as unemployment, insecurity and so on. Some of the debate is bound, in these circumstances, to pass people by. It is essential that we draw the lesson from this, and try to engage people on the issues that are important to them: jobs, security and stability. People want to see more transparency in EU decision-making, because obscurity in process is a huge impediment to understanding what is going on. If we get them right, these issues could promote confidence in the EU.
	This is hardly a sensible, propitious time to plunge into a further detailed discussion of the treaty. We must demonstrate first that we have delivered to the citizens of Europe on the issues which are important to them. We have to recognise that we must park the discussion on the treaty for the time being, and focus on the issues agreed at Hampton Court. The European Commission showed last week, in its communication on A Citizen's Agenda—Delivering Results for Europe, that this is also what it intends to do. We should embrace the same process in this country.
	On Hampton Court, the UK presidency of the EU in the second half of 2005 reasserted where Europe should be headed. The informal meeting of heads of state at Hampton Court clarified and determined what the priorities should be. Hampton Court gave us all a vital opportunity to reconnect with the issues that Europeans face on a day-to-day basis: economic reform, tackling the challenges—which they personally experience—of globalisation, energy, security, counter-terrorism and organised crime. The noble Lord, Lord Brittan, also illustrated how that process of discussion in economic and market reform within Germany can add to a debate on those very issues: real, consensus-building issues, if they are right. The noble Lords, Lord Bowness and Lord Brittan, have also made the point that many of the matters discussed are not restrained in any respect by borders, whereas others are, of course, for states and, through the states, for the Community. As the Prime Minister summed it up in his speech in Oxford in February:
	"don't start with the rules. Start with the reasons they are needed".
	Let us have a quick look at some of those reasons. The spring European Council in March reaffirmed 2007 as the target date for the liberalisation of energy markets. I shall not go into a major discussion of energy security and provision today, because there would not be time, but it is a real concern. Concern has often been expressed in this House over whether energy security is assured, and whether we can guarantee supply in the long term. The decision of the Council for the Commission to present a strategic energy review on a regular basis is a good step forward.
	On the discussion of the services directive, the internal market has boosted EU GDP by €875 billion over 10 years, and generated 2.5 million jobs. We must now complete the free movement of services, one of the four fundamental freedoms of the treaty. We support the Austrian presidency's aim to deal soon in the Council with a directive that will boost jobs, growth and competitiveness in Europe. To be candid, we would have preferred an even more ambitious statement. Our approach to the June European Council will be to drive forward, with our partners, the priorities of Hampton Court. That should remain our focus.
	The European Commission's Agenda for Europe paper, published last week, reflects the view of Europe's immediate priorities, which have also been expressed by the Prime Minister and Chancellor Merkel, who made the important point that although the German presidency wants to return to these issues:
	"However, I am against moving too quickly and putting us back in a situation where we can't move forward . . . We need to think about how we make the constitution a success".
	Her point is that the discussion process would necessarily be quite long. Most important in this period are the economic reforms needed to make the EU competitive in today's global economy.
	Of course, during the period of reflection, we have seen member states contribute ideas on the way forward for the future of Europe; but that is what they are: ideas. What a surprise that ideas get discussed in Europe, the continent of the Renaissance. This is a place where we will always talk about ideas. None has taken root, many are circulated widely. In France, Mr Sarkozy has called for a short treaty based on parts 1 and 2 of the constitutional treaty. President Chirac, who does not always sing from the same song sheet as Mr Sarkozy, has encouraged member states to exploit the current treaties, and says France will not put the treaty to a referendum again. The Scandinavians support retaining part 3 of the treaty. The Dutch say that the treaty is dead, without producing any alternative ideas. The European Parliament wants to implement part 1 of the treaty, which includes most of the institutional changes. The Germans have in the past publicly supported the entire text but the noble Lord, Lord Harrison, draws our attention to the fact that some of Chancellor Merkel's ideas seem newer than that. It is a great flow of ideas; among them, nobody particularly regarding any one member state as having the right to declare the constitution dead.
	Nor will I. I resist the offer of the noble Lords, Lord Blackwell and Lord Pearson, of the choice of being the treaty's executioner or its coroner. Since there is little evidence on any consensus, it is unlikely that this is the moment at which we will achieve one. There is little benefit in speculating on the divergent and hypothetical ideas in circulation. It cannot make sense to exclude incremental, sensible or practical improvements to the EU's functioning, as several noble Lords have said, on the basis of current treaties. So: no cherry-picking, nothing hidden and nothing by stealth. I agree with the noble Lord, Lord Howell, that we should deal with practical issues and not get drawn into that. I hope I am not putting words into the noble Lord's mouth. I had no intention of doing so.
	I will comment on some of the issues that have come up in this important debate, and some of the questions that have been posed. Some are questions which the noble Lord, Lord Blackwell, introduced in his speech and in his interesting pamphlet, which he will be pleased to know I have read very attentively, Sleepwalking into a European legal system. Some of the issues come up in the context of both.
	First, questions have been raised over whether there would be a referendum, and whether we can assure the House that there would be, should there be a constitutional treaty to vote on. The Prime Minister has repeatedly said that there will; I affirm that today, if it needed any affirmation. There is currently no such document.
	The benefits or disbenefits have been raised. We have huge benefits from being a member of the European Union. As the noble Lord, Lord Maclennan, said, disengagement would be an extraordinary position to take in the light of those benefits. Being part of the world's largest free-trade area has plainly helped to deliver prosperity in the UK. Today we are the strongest large economy in Europe, enjoying the longest period of economic growth in decades. Some 3 million jobs in the UK are due to the EU. The single market is the largest, richest market in the world, with 40 per cent of global trade. It is our biggest market. Half of British trade is with the EU, up from 35 per cent before we joined the EEC. Some £111 billion of goods have been sold by British companies in the EU. The single market has boosted EU GDP by 1.8 per cent, which roughly translates as £20 billion for the UK economy.
	There are all sorts of mechanisms and reasons why that is true. This is no argument for diminishing our interests and trade with the rest of the world, but it is a recognition of where some of the largest and most significant forces of trade necessarily are. I say with respect to the noble Lord, Lord Pearson, that, when he has produced figures as he has today, I have gone back to the Treasury and said, "Can we ground these figures in any kind of reality?" We cannot. We cannot find any serious economic justification for those figures, although I have no doubt that, on other occasions, the noble Lord, Lord Pearson, will challenge me on that again.
	Let me turn to the point about peace. I believe that, as the noble Lord, Lord Anderson, said, peace and stability on our continent have been absolutely vital and that the EU has been a major part of that machinery. The catastrophe of the Second World War is unthinkable in the modern European community. The goal of my father's generation, so long unthinkable in that generation, has been achieved on what has historically been a very violent continent. Of course NATO has been the umbrella that has protected us all, but the web of links among populations and people more used to killing each other than going to visit each other is fundamental to getting the legitimacy and the confidence in that military umbrella as the way in which we protect ourselves in the ultimate from outside forces.
	The EU has played a leading role in preventing war and in underpinning reconciliation across Europe in the 1950s and again after 1989. It has made a vital contribution. It has been a leading force in bringing stability to the Balkans. The EU is the biggest donor of financial assistance in the world. It contributes to active peacekeeping and active peacemaking and it runs many projects that help to support peace, democracy and human rights throughout the world.
	The EU has been very important in areas of the environment. I will not, because of time, go through the clean beaches, the unleaded petrol and all the other benefits that have come through those routes, but they are deeply significant.
	In this afternoon's debate, as we draw towards the end of a period of reflection, but without certainty regarding the future of the EU constitutional treaty, we have heard a wide range of views. There are those who would like to see the United Kingdom at the heart of Europe and those who would prefer us to withdraw tomorrow and to assume some kind of associate status such as that held by Norway or Switzerland. Like the Government, I lean to the former approach, where we play a full and influential role in Europe and are better placed to shape its future. Like the noble Lord, Lord Tomlinson, I think that we should resist discussions that undermine the interests of our people when these questions come up, but that we should nonetheless stay at the centre of Europe.
	I say to the noble Lord, Lord Waddington, that the primacy of EU law was part of EU law before we joined—those were the terms on which we joined the club. I say to the noble Lord, Lord Willoughby de Broke, that, on the advice of government lawyers and others, the Government's interpretation of Article 308 and its significance rests on the phrase,
	"in the course of the operation of the Common Market".
	We believe that that provides the authority and legal sanction for those matters. I say to the noble Lord, Lord Waddington, that I am delighted that he found out about John Bruton's residence from the Sunday Times rather than from a visit, because there would no doubt have been other stories in the Sunday Times had it happened the other way round.
	Other key points have arisen in the area of external action. No one is going to defend wasteful expenditure and I certainly will not. The external action service does not exist and will not exist unless the treaty is ratified. That is the Government's position and it is the position that I have put from this Dispatch Box. I will also say that the status of the charter of rights is that it is not a legal document, as the constitution is not in force. The charter is a political declaration adopted by the Nice European Council in 2000. That is what it is and that is what it remains.
	Finally, the Norway and Switzerland option was the alternative put at the beginning of this debate. It would mean no seat at the table, no commissioner and no vote—it would be like giving up our seat on the Security Council. It would mean no EU funds, although British taxpayers would most certainly continue to pay into the EU budget—that would not change. We would be weaker in the world. We would be less valuable as an ally to our principal allies, including the United States. We would negotiate alone in the World Trade Organisation. Outside the EU, cross-border action on terrorism and crime would be more or less impossible. Our position on imports and exports would be subject to costly tariffs and customs controls. The Switzerland option would give us no place at the table, no commissioner and no vote, and we would be involved in bilateral agreements with the EU following rules in which we had no part in deciding. On behalf of the Government, I cannot accept that that way lies any sense.
	We should have major discussions on the future of the way in which the EU is governed. But let us do it against a background of having convinced the citizens of the EU that it is theirs, that it is of benefit to them, and that their economies, their security and their quality of life have been changed because they are members of the EU. I believe that that is a sustainable argument. We have a duty—if we have failed in it in the past, we must learn from that as well—to score real goals in those areas first and then to turn to how our governance might be improved.

Lord Blackwell: My Lords, we are almost out of time, so I will not go back over all the conclusions, but I will thank all noble Lords who have contributed to this debate in what I think, despite our differences, has been a very honest and heartfelt way from everyone in the spirit of this House. I think that we agree at least on one thing, which is that this is an issue that it is important to debate and on which more debate of this kind is needed in the future. Although in my speech I may not have convinced the noble Lord, Lord Tomlinson, that I had buried the constitution, I suspect that we buried it fairly well today with faint praise. I was interested to hear the noble Lord, Lord Dykes, describe it as tedious and pompous. As we have heard, the Prime Minister now confesses that it was a mistake to put political objectives in front of real concerns.
	There is a need to know how we are going to move forward, how Europe intends to move forward and how the UK intends to respond to that. Broadly, four options were discussed around the Chamber. Some people said that the constitution is now dead and buried and that we should forget it and move on. Some said that there is so much in it that could and should be implemented and that the EU should find ways of doing that on a piecemeal basis. Some, like Chancellor Merkel, whom I quoted, think that we need a constitution and that some form of constitution should be put back on table. And some, like me, fear that, whatever we decide, the EU will carry on implementing much of the constitution regardless through the existing treaty base, and that our only choice if we do not want to be part of that is now to opt out.
	The one thing that I am not clear about at the end of the debate, despite the Minister's speech—and I am grateful to him for addressing my questions—is what the Government's position is, other than that it is not yet time to answer those questions. We will wait to hear, but sooner or later we will need to know what the Government's position is and sooner or later the British people will need to be given a choice and the British people will need to be given a voice. In the mean time, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Agriculture

Lord Vinson: rose to call attention to the state of British agriculture; and to move for Papers.
	My Lords, it is a great honour to open this timely debate on the state of British agriculture and it is a pleasure to welcome our new Minister, who I hope will find this debate a kindly, helpful and agreeable baptism.
	When I was a boy, I used to play in a tithe barn. Five hundred years before, it stored grain for the community in case of crop failure. Little has changed over the centuries and, worldwide, agriculture is protected or supported in some form or another because the production of food is essential. It is also an immensely high-risk business. I hope that this debate will throw useful light on the present mix-up that government intervention represents and will lead us to new and more appropriate policies.
	Agriculture is different. There is no other industry that plans its output years ahead and has no idea what price it will receive. In turn, that price can be inordinately affected by the weather, disease and exchange rates, and when the product finally gets to the market, it is at the mercy of buyers because it is perishable and has to be sold. It is for those reasons that agriculture has been protected throughout the ages. A nation either has a protected agriculture or, if it is fully exposed to international and natural risks, it has virtually no agriculture.
	That begs the question of whether we need an agricultural industry in the first place. Agriculture involves only some 2 per cent of the population so could an island such as ours not survive totally on imports? But this is a facile argument because most activities represent only a small part of the economy, be they farming, electrical power generation or dentistry. They are, however, no less essential for that.
	There is also another basic reason. This country has to pay its way in the world and must use its natural resources to its best advantage.
	In terms of natural advantage, the British Isles are good for growing grass, and cereal crops are, of course, a glorified grass and meat comes from grass. Our farming is efficient and we do it as well as anyone. It is an essential part of our balance of trade.
	Until recently, we were producing virtually all of our temperate food requirements, but the proportion has now slipped to some 62 per cent and is falling. The consequence is that our horrendous imbalance of trade has grown by a further £15 billion over that period and is now running at nearly £60 billion a year. If existing farming outputs were to fall further, coupled with the effect that that would have on the food processing industry, the imbalance could grow to nearly £100 billion a year.
	Furthermore, our oil balance is turning negative—we shall have to get down to paying our way in the world. An efficient British agricultural industry will help us do just that.
	We cannot go on meeting our imbalances by selling our best companies, property and government stock as we are doing at present; the nation is living off its capital and is selling its silver. That cannot last.
	The Governor of the Bank of England said that it is a question not of whether the pound will fall but of when it will fall, as the dollar is currently falling. Paradoxically, that fall in the pound will, by making imports dearer, bring a degree of protection to British agriculture, but, at that point, we shall need all the output we can produce and will be glad to have it. The internationally exposed sectors of the economy are very much the victims of the rate of exchange and our rate is held artificially high by disproportionate interest rates attempting to prevent a rationed housing market exploding.
	Critics often ask why we do not we treat our agriculture like New Zealand treats its, which is managing all right. The answer is that New Zealand devalued 20 per cent when it adopted an open trade policy and that immediately gave its farmers a better margin, and New Zealand is climatically the finest lamb producing area in the world. Here I am more than pleased to declare an interest as a hill farmer in Northumberland since I retired from active business life. Few people realise that the UK sheep industry and that of New Zealand are comparable, but sadly the UK lacks the co-operative marketing that has served New Zealand so well.
	Worldwide, there is an eternal cycle of government intervention in agriculture. It goes like this. Food is a commodity that nations do not wish to run out of and hence production is encouraged. That leads to surpluses. They lead to low world prices. Production then becomes even more uneconomic, and governments subsidise at a higher level to ensure supply. That gets expensive. Governments then get fed up with the whole thing and scrap it. A few years later, food shortages loom as farming declines—as in Canada today—so governments start to subsidise all over again, as America did five years ago. I believe that Europe is about two-thirds of the way through that cycle.
	At the Doha talks, it was suggested that the EU should open up its agriculture and buy from the underdeveloped world. It is difficult to see how the EU can buy from Africa, for example, which cannot even feed itself.
	The scale of the food supplies needed to feed the EU, let alone ourselves, is little recognised. The United Kingdom's demand for cereals is some 20 million tonnes a year and if even half of that were to be placed on world markets, the Chicago price of wheat would rocket through the roof. Old Europe grows some 200 million tonnes of grains a year compared to North America which grows some 300 million tonnes of grains a year. Even if half Europe's demand—100 million tonnes—were withdrawn and placed elsewhere, it would not work. There would be food shortages on a massive scale and little left of the Amazon jungle by the time Brazil had cleared it. So much for Kyoto! If global warming is a threat to long-term food security, that has to be taken seriously. Europe needs its farmers.
	There is, of course, one over-arching consideration for government intervention in agriculture today, and that is that our landscape is dictated by the nature of its outputs. Our landscape was largely formed by sheep: they are the best lawnmowers in the world. The environment is important and must be protected.
	It is for all these reasons—and they are widely accepted throughout the EU—that agriculture is treated in a special way, and needs to be. Even the Americans, with the most efficient grain-growing land in the world, subsidise their farmers to protect them from world prices. World food prices seldom represent the cost of production but are largely influenced by surpluses dumped to clear the market. The growing fair trade movement is recognition of that and aims to give primary producers precisely the same artificial price support that we give our farmers.
	If food is sold below the cost of production, it can be asked who is subsidising whom? Worldwide, food is too cheap. Without surplus production, the price of food would rise and the taxpayers' money, currently going into farming through subsidy, would in theory be spent directly. But manifestly, in world agriculture a perfect free market does not work and cannot work.
	So, if we are going to protect British agriculture, then let us at least do it efficiently. I have no doubt that, during this debate, other noble Lords will draw attention to the scandalous inefficiency of Defra, which has got itself into a hopeless muddle, largely because the present system is complex to administer and calls for excessive bureaucracy. Farmers have had to find millions of pounds to pay interest on loans they have taken out to cover shortfalls caused by the failure of subsidies to arrive. No other government in Europe bungled it. The failure is unique to Britain and Margaret Beckett, who had been head of Defra since 2001, was responsible for this fiasco. The new Minister will need a big broom to clean the Augean stables.
	British agriculture is currently declining, even with subsidies. Real farm incomes, unlike those of any other section of the community, have fallen dramatically and are some 10 per cent less than they were 10 years ago. Many farmers earn less than the men they employ. Our agriculture is declining, as this debate will no doubt bring out, because of ever-rising costs and ever-falling market prices. For example, it used to take 200 sheep to buy a tractor but now it takes 400 sheep, and milk is sold in supermarkets for half the price of bottled water. When it comes to regulation, a farmer said to me the other day, "I spend most of my time filling forms. We shouldn't now be called "farmers"; we should be called "formers". But the present wasteful and inappropriate EU subsidy shambles does not weaken the case for agricultural support.
	It is difficult to see what our membership of the EU does for Great Britain, and farming and fishing in particular. We are currently supporting our farming industry with money recycled back from part of our contribution to the EU, and it would be sensible seriously to consider repatriating the right to run our own agriculture with our own money in our own way.
	Many believe that we should return farming support back to the simple and logical deficiency payment system that gave the public cheaper prices and only supported the efficient farmer when the market price dropped below the median cost of production. That could be coupled with a simpler form of agri-environmental support by amalgamating the complex cocktail of the present schemes—countryside stewardship scheme, single farm payment scheme, single entry scheme, English woodland scheme, habitat scheme, and so on—bringing with it a huge reduction in bureaucracy, and a far less harassed lifestyle to our agricultural community, where the young simply do not want to face the endless hassle now carried by an ageing workforce.
	I am sure that other speakers in this debate will develop all such ideas, and many more, which time prevents me raising, and we have, indeed, a very distinguished and experienced panel of speakers today.
	Agriculture and the food industry it supports have delivered fantastic rises in productivity which underpin the standard of living of us all. In the immortal words of Sir John Harvey-Jones:
	"If it wasn't for the scientific development of agriculture we would all be hoeing".
	Currently, world production of food is only just meeting demand. Organic farming will not feed the planet. I am no Malthus and I believe that, with sensible genetic development, wheat, for example, could be made self-fixing in nitrogen. That would make agriculture and the fertilisers it needs far less oil-dependent and the world could continue to feed itself cheaply. A prosperous British agriculture should be at the forefront of such developments.
	Agriculture is a long-term business. You've got it or you haven't got it. You cannot simply turn it on and off. I hope that this debate will help our new Minister in his thinking and ensure the prosperity of an essential British industry that can help us to pay our way in the world and, at the same time, give a reasonable living to our farming community. I beg to move for Papers.

Lord Christopher: My Lords, as someone who perhaps does not quite match the description of the speakers who follow him given by the noble Lord, Lord Vinson, I congratulate him very genuinely, and not as a matter of convention but because I have long hoped that there would be a debate about agriculture here. It is not a natural subject on this side of the House. I am very glad indeed to welcome my long-time noble friend to the ministerial post and assure him that whenever possible he can have some support from me.
	I hope that what I wish to say will be helpful, and I hope even more that I can perhaps sow a few seeds. I find myself in great sympathy with the majority of what the noble Lord, Lord Vinson, said. My first question is: do the Government have a medium-term to long-term policy in agriculture? I believe the answer is no. Have the Official Opposition got one? Frankly, I believe their view is, "No, we don't either". So we almost have a blank sheet of paper with a lot of problems where we could begin to think long-term. I expect the nature of the issues to be seen very largely as cross-party, because there is much more at stake than simply the political issues.
	Yesterday, we had a Question on British values in education. One thing was not mentioned, and it probably never would be; that in Britain we have a splendid tradition in politics to never shut a stable door until satisfied that the horse has bolted. That is pretty clear when we look at a number of issues around us. Energy is pretty much in the news, and there are others—rural housing, roads, traffic and so on. The time is certainly overdue for us to begin to think long-term about farming.
	I begin with an issue which the noble Lord, Lord Vinson, touched on, which is food supply and food security. What proportion of what food is now imported? Where does it come from? Long term, which sources are secure? I have never seen any satisfactory answers to those questions. What will be the changes, for example, in volume and nature with populations who now live on cereals but who increasingly demand meat? Argentina is a very good example. At one time Argentinean meat was common in our shops; now it is not, and it is substantially consumed locally. When South America et al and China have a standard of living which matches ours, they will see a considerable change in demand for different foods from those they have now.
	Secondly, there is the World Trade Organisation, a matter mentioned by the noble Lord, Lord Vinson. How much longer can it persist with its narrow approach? The last time I mentioned this I was dismissed, not wholly politely, by someone on the Benches immediately opposite me as being anti-free trade. I am certainly not, but I do not believe that if you do not support the United States's protectionism that you can necessarily leave things without any consideration of the changes that there should be in WTO thinking and policy. For example, on the sugar agreement, if other things had been considered, we would not have had a very damaging result for many poor countries. That case was brought by two countries that really did not need any help at all, Australia and Brazil. We should address and consider the principle whether something should be done.
	Thirdly, we should be looking at public education. Food is seen as something which comes in plastic bags and supermarkets. There is a lack of understanding of what farming and food are about. There are questions of health, food price, which I agree is too low, tastelessness—even the Jersey Royals I bought the other day had no flavour at all; whether it is over-production or whatever I do not know, but they did not taste very well—and of course quality.
	Fourthly, are a handful of supermarkets less of a monopoly than the Milk Marketing Board? I suspect the answer is no. Should they be as influential as they are—more so than any other institution in Britain—in dictating, albeit a step back, farming policy?
	Fifthly, I turn to the National Farmers Union. I am looking very hard in front of me at one or two faces. I wish Peter Kendall, the new president, well. I was sorry to miss him at the reception held recently. If I was talking to him, I would say, "Yes, react when you must but, for goodness' sake, start being proactive. Be more constructive". Public opinion for farmers is absolutely essential. They get nowhere unless public opinion is with them but they seem, more often than not, to alienate the public.
	I take as a good example the renewal of live exports, especially of calves. Mr Kendall says, very helpfully, that he wants to export only to those countries—France, Belgium or wherever—which comply with the new EU regulations for raising them. Fine, but prove it—show people what is happening. Yet the politically carefree Richard Haddock, south-west regional chairman of the NFU, seeks to import calves from Spain and Italy to the UK for re-export. What on earth does that do to the public opinion on what farmers are about? Why does the NFU not condemn it now? I would like to know what needs to be done to raise UK demand for veal produce under conditions which people will accept. There is nothing wrong with veal, but we certainly do not seem to eat it here.
	If the NFU is right on badgers, that will be a most damaging piece of publicity for farmers. The science says that it is not wise, if not wholly wrong. I am old enough to recall when tuberculin testing first came in. Bovine TB reduced progressively and was eliminated. Are badgers alone responsible for its return?
	There are one or two things that we should consider in this context. First, why is the effect of inbreeding more prevalent in dairy herds than in beef herds? The noble Lord, Lord Soulsby, sent me a most interesting report recently. I do not have time to read it, but it clearly talks about the effect of reducing the constitution of animals, albeit of companion animals, which is clearly relatable to farm livestock. When I see cows limping around, lame because of the size of their bags, I wonder what we are all about or what the public think we are about. Part of the cause might lie with us—the farmers—and not with badgers or any other consideration. When you create cows with short lives and yielding two or three times what they did 20 years ago, you must expect some reaction.
	To conclude, I seek a major NFU contribution and a long-term policy that has wider considerations than simply farmers and farming.

The Earl of Erroll: My Lords, I thank the noble Lord, Lord Vinson, for the opportunity to discuss this matter, although I am afraid I am extremely unprepared because I am in the middle of wrestling with my wife's SP5 forms, and it has taken much longer than even I expected when I was working out stuff on the spreadsheet. It would be easier if I could simply send my spreadsheet off; the figures would be accurate. The problem is getting the right things in the right boxes, but that is another subject. I return to the sorry tale of ordinary farmers in the field.
	There are two brief points to make. I congratulate the Minister on taking over at a very dangerous moment. I think he is a very brave person indeed. I felt very sorry for the noble Lord, Lord Bach, who I think tried very hard but who unfortunately was misled. I think there are problems with the structure of agencies reporting to departments and to Parliament, but that is another subject for another day. I also thank the Minister for the 80 per cent cheque that we received the other day. As I shall discuss later, I wonder whether we will receive the other 20 per cent later.
	I shall continue my little story of where we will get to with this thing, and why I thought we were getting somewhere but why I am beginning to wonder whether we are not descending back into chaos. I do not understand how Defra will sort out and reconcile the parcels that I am now putting into the new SP5 forms with the ones I entered last year because, since then, we have had a set of maps from the RLR. Defra will reconcile them with the 2005 ones to establish the entitlements, against which it will recheck my 2006 form. I can help Defra with the form, but I doubt whether it will be able to sort it out itself because everything has changed since the base for the Ordnance Survey mapping was changed to make positions of the parcels more accurate, so some of the parcels have moved by up to half a hectare. So although I agree that the position of 590 parcels overall is to within 0.04 of a hectare, some parcels vary by up to half a hectare, plus or minus, individually. That cannot be reconciled entirely because the base maps have changed and there is a real problem with it. The attitude is, "If you want some consultancy, I will help you; I have offered it before".
	The real problem will arise later this year when the inspectors come round and try to remove the money. They start by saying, "You have not complied here, and this and that is out. We are going to dock this money and that money from you". I am very worried, as are several other people, that that is exactly what will happen to the last 20 per cent, because how do you repeal the decision? If the inspectors can find enough little non-compliance issues, they can unilaterally remove your last 20 per cent and keep it for the Government or whatever. I do not know what happens to it, but I can tell the House that there is a lot of suspicion out there. It is a lot of money.
	I am in despair. We agreed our maps with the Rural Land Registry on 21 April; there was one tiny boundary change to make, and that was all. On 17 May—yesterday—we received a new print-out of some SP5 forms. I thought, "Oh great. These will be up to date and accurate, because the last ones were not". I was not waiting for them; I did not expect them. Were they accurate? No. Thirty-two of the fields—exactly half of them—have discrepancies and have to be redone. It does not matter; I am rewriting them. Indeed, that is what I have been doing today, instead of getting on and preparing my speech. I rang up the registry's customer service centre at Newcastle to ask what was going on. We checked one of them and found that it was right; it had been updated. So where do we lie?
	Even more confusing this morning was a big packet from the Rural Development Service. We have been trying to get into an entry-level scheme since last August. What has it done? It has lost 80 to 90 hectares. I have not had time to add it up, but it has lost several major parcels. As those parcels are woodland and so on, they earn you the money for the points you earn by setting aside land in the fields, so you cannot go into a partial ELS. What frightened me when I talked to one of the assistant consultants we have working on this for the RDS is that they did not understand it. They wondered why we were not getting our payments. I said that it was because I did not have the maps. Even people working at senior consultant level do not understand the problems, so now I understand why there is a problem. The assistant consultant is a very nice chap who knows what he is talking about in some ways, but he does not understand the complexity. Another ELS problem arises which I shall not even tackle because I do not have enough time.
	As I said in my last speech, the real cost of the ELS is all about farmers having problems and struggling. Isabelle set aside the land, paid for the seed, applied and did all the work for the ELS last year. Can she get the money? No. That is the real cost to farmers, quite apart from the lost interest and all that sort of stuff. I now understand the rather depressing A5 booklet we received about two years ago, which basically said, "There are four things you can do under the new scheme. We suggest you retire, diversify, try to continue to farm, or sell. We suspect that none of these options will actually see you through the future". I thought it was one of the most depressing things I had ever read. How true it is becoming.
	The banks, as the noble Lord, Lord Bach, said, are happy with the situation. Of course they are; they are lending us assets. What will happen? This is the interesting thing about it; is it the nationalisation of land through the back door? The farmers go bust, and the banks take the assets and sell them to new City money or yuppie money that has come from somewhere. Those people will not know how to manage the farms, so they will get land agents in who will charge them a lot of money for doing it, but it does not matter whether they are profitable or not. Then, of course, the academics at Defra will tell the agents what they have to do, and the agents will be compliant because it is not in their interests not to be so. We peasants who survive—idiotic or otherwise; those few of us who try to continue to farm—will carry out their bidding. But that is about all we are doing—we are not farming any more; we are just following a rule book. What if the rules are wrong or idiotic? The other night, reading the latest huge thing from Defra about derogation that she had to go through, Isabelle said, "Oh! We are not going to be allowed to drive across some of the fields without getting written derogation first from Defra". What happens if there is a water or gas leak on the other side of the field? Are you going to lose your cross-compliance money because you will not be cross-complying, or can you respond to the emergency? It says nothing about it in the handbook. It is just another way of getting rid of that final 20 per cent, is it not? Defra can just hope for some water leaks around the place.
	Then there are the mowing dates and being worried about your set-aside. Have you got it exactly right, down to the nearest 0.01 of a hectare? You may have some reserves. The trouble is that the rules for mowing fallow are different from the rules for mowing set-aside. There is a window of about two weeks in which you can comply with both. What happens if it rains? Do you think you will get your derogation from Defra to go and do the field in time? My wife is still waiting for a derogation to use a particular spray. She applied for the derogation last harvest, but has still not had a reply from Defra. I am afraid that you are not going to get it.
	What do we do? We have more regulations, all of which are well meant and a good idea. They look good on paper. I read a Defra booklet yesterday in the National Liberal Club. It said that Defra was protecting the watercourse. It is, and it is quite right that we should protect watercourses and all sorts of other things. But these things carry a cost, and we will not survive at all as farmers unless money is put into trying to comply with these higher standards, which the rest of the world does not comply with. The regulations are well meaning, but it is very difficult to comply with some of them.
	Then there are the nitrate-vulnerable zones. The RB209 guidelines are supposed to be guidelines, but I can tell the House from experience that the inspectors are adhering to them and will fine you if you do not adhere to them, because they have tried it on Isabelle. She passed them on to her agronomist, who said, "Oh, don't worry. We won't have a problem". He came back to her and said that it was difficult; this year, everything was being marked down. As she is growing energy crops, she has to hit a representative yield, but we do not know whether the RB209 guidelines will allow her to do that, so she may lose her money one way or the other. What happens if the weather changes? With new crops, there are new nitrogen uptake requirements, and things like that. There are all sorts of matters of opinion in the guidelines. Noble Lords should try reading and understanding them—it took me a long time.
	I am sorry to talk so much about the everyday toil of farming folk in this country, but it illustrates a little the parlous state that we are in.

Lord Tomlinson: My Lords, I join others in thanking the noble Lord, Lord Vinson, for this very necessary debate. Having said that I welcome it, I shall make one or two comments on things that he mentioned. He bemoaned the fact that we did not have a return to deficiency payments. I merely remind him that his Government had the opportunity between 1979 and 1997 to do something about that. Equally, when he talks about the repatriation of the CAP, were that to be desirable, the same comment applies. He also bemoaned the lack of co-operative marketing strategies. My understanding of co-operatives—and I have some background in co-operatives in other areas than agriculture—is that almost by definition they are a do-it-yourself process. If co-operatives are desperately needed, the remedy is in the hands of farmers to do something about it, not to bemoan the fact that nobody else has done it.
	I marginally disagree with my noble friend Lord Christopher when he said that this subject was not a natural one for Members on this side of the House. As somebody who represented the constituency of the noble Lord, Lord Plumb, in another place for five years, part of the necessary imperative for peaceful coexistence was that I had a masterclass from him at least once a month during that period. That taught me to appreciate agriculture and recognise something of its importance.
	This afternoon I want briefly to look at the strategy for sustainable farming and food that was launched at the end of 2002. In that strategy were several very important long-term aims for agriculture, which are apposite to the circumstances that we face today. Long-term aims for agriculture included the need to secure a more competitive and sustainable industry with a stronger market orientation. I certainly welcome that. They included, too, the aim to reduce agriculture's reliance on subsidies based on production and reflect instead the public benefits that agriculture provides. I certainly support that, too. In addition, there is the aim of encouraging restructuring for long-term economic and environmental sustainability, which I also support.
	In those circumstances, the reform of the CAP is fundamental and central to the implementation of that strategy—free to farm to the demands of the market as subsidies are decoupled from production. We are now moving in that direction but what a pity it is that we have wasted so much time. For many years I served in the European Parliament and regularly in our debates and discussions on the budget and on agriculture we complained about subsidies being linked to production, about over-production and about the process of intervention—and we discussed dumping on the world markets, with concomitant damage to third world agriculture when, at the same time, the system was endemically encouraging fraud. We complained about all those things. Something is now being done about it, and I welcome the commitment of the Government to CAP reform. It is slow, but the slowness is caused not by their reluctance but by the necessity to drag parts of a reluctant European Union along with them. We should give credit to the Government and praise where it is due.
	We should recall, in the system that is being replaced—one hopes to the benefit of the environment—the environmental damage that was being done in striving for constant levels of production irrespective of quality and the environmental damage done. You have only to look at the costs currently being borne by consumers in the water industry to see the price that they are paying for the excessive use of nitrates by some of our grain producers to lift their production levels.
	Agricultural reform is extremely important and the vision has to be one in which we have a more sustainable farm sector, which is genuinely competitive in a globalised world. The CAP does, and will, so distort the European budget, that there are financial as well as agricultural and environmental imperatives in this process. If we need a common policy and not a production subsidy, does not that open up the possibility for some areas of national financing or at least some areas of co-financing of agriculture?
	In the debate on agricultural reform, inevitably a lot of people in the United Kingdom have focused on the problems every time the UK rebate becomes engaged in the discussion. I am somebody who believes that we should compromise no further at any point in the discussion of the UK rebate. That rebate is something that mathematically would work itself out of the system if we had the correct agricultural reforms. The rebate is a correction to the expenditure side of the budget; if we got expenditure on agriculture correct, the rebate would mathematically work itself out of the system. I believe that there should be no more compromise with that; it should be the measure by which we know whether we have got the right reform.
	On farm incomes, I listened to what has been said. I recognise the problems but, to be totally fair, we should talk not only about farm incomes; we should also note that the Farm Business Survey showed that 46 per cent of full-time farms in England in 2004-05 had diversified business arrangements, and that the average output of the diversified activity was some £18,500—very often a sum larger than that which the farmers were earning from agriculture. In parenthesis, I wonder why it is that, with the crisis often referred to in farm incomes, agricultural land prices are rising dramatically.
	Finally, I pay a personal tribute to my noble friend Lord Bach. He served this House well and the Government loyally, a service that was not entirely reciprocated in the recent reshuffle. I shall refer briefly to two particular aspects of his work. With the single farm payments, he was working with a system and implementation programme not of his making—and if we look at the situation today, we find that 85 per cent of payments have been made. Although he was subject to political criticism, that criticism was not offered by any of the farming unions; neither the NFU, nor the CLA, nor the TFA criticised him. I also pay tribute to the work that he did in the lifting of the beef export ban after 10 years. There was a great success and a great fillip for the beef sector of British agriculture, and I pay tribute to my noble friend for his role in it.

Earl Peel: My Lords, like other noble Lords I thank my noble friend for introducing this timely and very important debate to your Lordships' House this afternoon. I declare an interest as an owner of land in the north of England.
	Before making my small contribution, perhaps I could join with others in welcoming the noble Lord, Lord Rooker, to his new position. However, as the noble Lord, Lord Tomlinson, said, the reason why the noble Lord is in that position is because of the departure of his noble friend Lord Bach. I do not wish to comment on the reasons for the noble Lord's departure other than to agree with others that it seems bizarre that he was so unceremoniously dismissed when the architect of the single farm payments fiasco has been promoted to Foreign Secretary. But I would like to say that I very much appreciated working with the noble Lord, Lord Bach, which I did in some detail during the course of the Commons Bill and the Natural England and Rural Communities Bill. I always found him extremely courteous and very helpful.
	Returning to British agriculture, the fact that so many farmers have been rocked sideways because the single farm payment has not reached their bank accounts speaks volumes and demonstrates only too clearly how desperately vulnerable so many of them are. But I agree with much of what the noble Lord, Lord Tomlinson, said. The truth is that the old system of production-based subsidies was unsustainable and, certainly, politically unacceptable. But, as happens to all industries from time to time, there are big shake-ups and the consequences can be dire, certainly in the short term.
	I have met and spoken to quite a number of farmers of late. Inevitably, I get fairly mixed messages. But notwithstanding the wise words of my noble friend Lord Vinson and some of his predictions, I believe that among so much gloom and despondency some optimism is beginning to shine through. It would seem that elderly farmers are perhaps less concerned. They have, if you like, done their bit and could look at the single farm payment as a sort of pension. The ones in the middle—those of my age—I think are struggling. They have farmed in a particular way for so long that the change is quite difficult to come to terms with.
	However, the younger farmers are, I believe, more encouraged by the future. I accept that they buck at all the regulations and no doubt believe, probably quite rightly, that many are quite unnecessary. But they can by and large cope, particularly due to their grasp of modern technology. They have learnt the concept of high quality, traceable food and how to connect with the consumer and the retailer. The problem, of course, is that the retailer has much more to do in connecting with the producer, which is half of the problems that we face today.
	Furthermore, I have seen some remarkable examples of on-farm diversification, a point that the noble Lord, Lord Tomlinson, raised. But we should not think that this is automatically the panacea for all our farming ills, for the simple reason that not every farm can provide an alternative source of income. Indeed, not every farmer is willing or capable of embracing alternative business opportunities. Why should they? It was not perhaps their calling in life: they are farmers.
	Most farmers I know accept the need for change, but in return they ask for two things—fairness and consistency. In my belief, both those commodities have been in rather short supply of late. It did not help when the then Secretary of State, Mrs Beckett, hailed the recent deal on the CAP budget as a major success, only to be undermined by the Prime Minister who announced that the CAP needs further reforms. That threw everything into chaos. Now no one seems to know where we stand with regard to future Pillar 1 payments, what levels of modulation are to be implemented and what will be available under the various rural development and agri-environment schemes under Pillar 2.
	Marketing is clearly a key component of modern farming. Surely, labelling should reflect the true source of the produce sold. It is no use when imported pigs, for example, are treated and cured in this country, and then sold under the Union Jack logo, which I know is happening, for example, in a big plant in the West Country.
	However, the one point that I find totally illogical is how cheap imports of meat can be allowed to enter our markets, when it is quite clear that they come from countries where animal welfare and general standards of production fall far short of those that are so rigorously imposed on our own farmers. What are the Government doing to redress that situation? Perhaps more importantly, what can the Government do given the WTO trade conditions?
	Clearly, the role of the farmer in the countryside goes well beyond the production of food, a point rightly made by my noble friend Lord Vinson. Access to the countryside is, by tradition, a free service. Logically, if as a nation we wish to see a landscape that is well cared for and managed to produce not just food but also diverse habitats and wildlife, clearly that must be paid for out of the national purse.
	I resent the word "subsidy" in such cases when clearly the farmer and land manager are being paid to provide a service. Wildlife needs management. It does not just happen. I am bound to say that the balance of nature can at times be very disappointing. Much has been promised in terms of resources for agri-environment schemes, but whether the finance will meet the expectations again remains to be seen.
	Perhaps I may finish with a few words about the hill farmer. I have a special interest as I own land in the hills, most of which is subject to tenancy, and I know what those farmers are going through. I believe that this stalwart community, many of whose families go back several generations, is worthy of special treatment. Here, the future looks particularly precarious and it is a fact that without the availability of the various environmental schemes, most would not survive. There can be no doubt of the potential impact on some of our most important landscapes. Unless we ensure the survival of those with the special knowledge of sheep husbandry and professional skills the impacts could be very severe indeed. To that end, I suggest to the Minister that the present hill-farming allowance be continued until its successor has been fully thought through and the Rural Payments Agency is fully confident of implementing a new scheme effectively.
	In conclusion, whereas no one can underestimate the significant problems facing our farmers, I believe that there is, as I have already said, a slightly brighter future ahead. Our farmers have a great track record of resilience, which is second to none. But the future lies in the young men and women who can adapt to those changing forces. However, it is imperative that the Government encourage them in every possible way that they can, which is a lesson that perhaps we could learn from—dare I say it?—the French.

Lord Beaumont of Whitley: My Lords, I, too, offer my thanks to the noble Lord, Lord Vinson, for introducing this debate at this time. It has already shown its worth. We have had a number of first-class speeches, most of them provocative. I hope not to let that tradition down. That British farming is in a mess is no secret. Indeed, world agriculture is in a mess, but I imagine that it is the national problem that we are addressing today, although the roots of our troubles lie in international economics and, to be specific, in free trade.
	Free trade as a dogma, as an extreme, is the invention of the Liberal Party. It is a con trick to extract the votes of the townsmen at the expense of the countryman. But like all dogmas coined by conmen, it is the corruption of something worth while. Extreme free trade and extreme protection are both deeply flawed. As so often, we must look for the golden mean. Extreme free trade counts as its virtues the production of cheap goods and cheap food and thereby always pays the least possible wages and does the least possible for the environment. That is the logical way in which it must progress.
	Extreme protection makes the rich richer, usually at the expense of the poor. The golden mean is to be found, as we are beginning to realise, in the concept of fair trade. Fair trade is free trade conditioned by care for people and the world, and moderate protectionism is protectionism where it can be justified by care for people and the world. That justification, when we are talking about food production, can be found in the doctrine of food security, which has been mentioned several times in the debate and is a concept that the older ones among us are quite used to, since it governed our survival in World War Two. Then we had to grow as much food as possible and pay in wages and profits to workers and farmers at least the amount necessary to ensure it. Since then, we have been able to neglect our agriculture, and therefore our countryside, by buying cheaply all over the world. But for those of us who look ahead further than the next 10 years, the unique window of 150 years when the world could in the short term afford the luxury of free trade, is coming to an end.
	The trigger for this reaction to normalcy is the end of the age of oil. But, you may say, "The world is awash with oil". And so it is, but the world being awash with anything non-renewable is the inevitable sign that production is at or just past its peak. In this case, the experts largely agree that it is just past its peak. Economists tell us that that is merely the signal for substitution, so that is all right then; except that in this case there are no substitutes. Nuclear power actually needs a lot of fossil fuel to set it up, and there is no way any sane man knows of disposing of its lethal waste. Biomass has its uses, as is often said in this Chamber, but it is a direct competitor with food for fertile land, and fertile land is something which we must preserve at all costs. There are various other candidates to replace oil, but they all involve using more energy than they produce.
	So, if we want to eat—and I think we all do—we must set about making this island as self-sufficient as possible. That involves taxing imports of foodstuffs sufficiently to make it profitable for farmers to grow food, and subsidising small farms at the expense of large ones, because small farms grow more food in quantity per unit of land and manpower than large ones. The bonus, in addition to not starving, is that we will begin to rebuild our countryside.
	None of this will be easy because it would involve, among other things, leaving the European Union and the World Trade Organisation. But it ought at least to unite the nation as World War Two did, since the Labour Party will be able to abandon its creation of a nannied suburbia in favour of its old ideals of increasing the welfare of the poor, and the Conservative Party will be able to perform its duty to conserve. It may be a bit tough on the Liberal Democrats, but you can't have everything, and it ought to cure them of being carried away by dogma. Conmen can't get away with it for ever.

Lord Corbett of Castle Vale: My Lords, I join in congratulating the noble Lord, Lord Vinson, on staging this debate, and I welcome especially the return of the Minister, my former neighbour in Birmingham when we were both at the other end of the building, to ploughing this particular furrow. I know that he has a strong attachment to it. I should tell your Lordships that I was briefly a Member of the Commons Agricultural Select Committee, and for 10 years during the last century I was on the staff of Farmers Weekly; not sitting at the seat of the noble Lord, Lord Plumb, but more often than not enjoying a glass with him and none the less picking up his wise views on the state of the industry then.
	Of course then, as now, the health of British agriculture was vital to all those industries that make fertilisers, sprays, medicines, machinery, twines, vehicles and all the rest. Then, as more painfully now, the costs of oil-based inputs were crucial to the industry's prosperity. As in too many of our basic industries, the "big is better" philosophy overtook the more sustainable "small is beautiful" experience. I believe that we have neglected the importance to agriculture and rural communities of small, family-run farms, either tenanted or owned, and sadly the healthy independence of farmers has perhaps denied them the benefits of co-operative buying, selling and other innovation.
	I want to talk briefly about Mr Bill Howes, who runs a 30-strong herd of Tamworth pigs at the back of his semi in Burton Green near Coventry. The Tamworth pig, of course, is primarily a bacon pig. The "Rural Living" section of the Birmingham Post yesterday helpfully told us how last year Mr Howes won with his Tamworths at the Royal Show, just at the end of his road in Stoneleigh near Kenilworth, and at the Three Counties Show near Malvern, and that he took Reserve Champion in the interbreeds class at the Hatfield Show in Hertfordshire. Does he like his pigs? This is part of a poem he wrote about them:
	"If you like pork and bacon too,
	A Tamworth is the pig for you
	By young and old, its meat is eaten,
	For its flavour, it can't be beaten,
	For something special in your sty,
	A Tamworth is the pig to buy".
	Now there's a man who knows and cares about his pigs. It illustrates the point that small can indeed be successful and beautiful.
	The tragedy now is that too many people—and not all of them young, as my noble friend pointed out—think that milk comes out of a bottle and meat from a shrink-wrapped pack. The industry itself has perhaps been too inward looking, and it has taken harder times for farmers to get into innovative ways of earning a living where that is possible, and especially the development in terms of both cash and consciousness of taking farmers' markets into the hearts of our towns and cities. They have been a great success and they speak volumes about the regard with which the agricultural industry is generally still held.
	But farming, like every other supply or service industry, depends on people, and most people need somewhere affordable to live. Almost one in five of England's population lives in rural areas, a point not always appreciated. They live in settlements with populations of fewer than 10,000 people. Workplace earnings data show that average earnings in 2004-05 in most rural districts were £17,400 a year compared with £22,300 in the major urban districts. Those figures come from a timely final report published yesterday by the Affordable Rural Housing Commission. It was set up last July by Defra and the then ODPM. Its task was to inquire into the scale, nature and implications of the shortage of affordable housing for rural communities in England and to make recommendations to help address this unmet need. In passing, I am very sorry that the brief kindly provided by the NFU for the debate today did not even mention rural housing. I know that the union recognises the problem, and I am only sorry that the issue was forgotten. I commend the formidable Eleanor Goodman, a distinguished former political editor at Channel 4, for producing such a thorough report in a mere 10 months.
	It is interesting to note that the problem of the lack of affordable housing either to rent or to buy in many of our towns and cities is precisely mirrored in rural areas. One of the major causes in both cases is that councils were not allowed to build to replace when a previous Conservative Government introduced the right to buy. That, as the commission report argues, has had a proportionately greater impact on reducing the stock of social housing in rural areas than it has in towns, and fewer homes have been built to replace it. And affordability has fallen over the years. Between 2000 and 2005 the average house price rose by £73 in every £100 in rural areas, against £68 in every £100 in urban areas.
	The commission makes what I believe is a compelling case for building more affordable housing for rent, part sale or sale, arguing that 11,000 new homes a year are needed in settlements of less than 10,000; that number could be reviewed over time. The Housing Corporation plans to fund housing associations to build around 3,000 homes in these areas in each of the next two years, but that ignores the fact, as I have said, that roughly one in five of the population lives in rural areas but gets only one in 10 of the new homes that the Housing Corporation is going to fund.
	It is not as if suitable land in rural areas is not available. The report notes that a good deal of land in the countryside is owned by the public sector. Some of it has become redundant. One thinks of the sites of former big out-of-town mental hospitals and military establishments, let alone former industrial brownfield land. The commission urges extending the partnership, working between public bodies and the private sector to release this land.
	The answer, says the commission, is to expand the ways that link private and other non-statutory bodies and the public sector in affordable housing. The idea is to involve landowners, the private sector and the not-for-profit organisations, such as community land trusts, to work together to enable those who work in rural areas to afford to live there, with a prospect of their children being not too far away when they start to raise their own families.
	The report's most controversial suggestion is that local councils should have planning powers to prevent the sale of properties in rural areas as second homes, exempting present second homes. An ODPM survey two years ago found that there were 93,000 second homes in mainly rural districts of England. The use of such powers will be decided on a case-by-case basis and would build upon the restrictions already in place in most of the national parks and to be introduced in parts of the Scottish highlands.
	I should say to the noble Baroness opposite that this makes it the more surprising that the Conservative spokesman on communities and local government in the other place condemned the suggestion yesterday. Barely was the ink dry upon the report. I hope that she will reflect more deeply on that. That is why I am glad that the Secretary of State for Rural Affairs, David Miliband, and Ruth Kelly, the Secretary of State for Communities and Local Government, are giving this idea careful consideration.
	This is not a small matter. In South Hams in Devon, 10.9 per cent of the homes are second homes. In North Norfolk, the figure is 10 per cent; in Penwith in Cornwall it is 8.6 per cent and in South Lakeland in Cumbria it is 7.6 per cent. So this is a really big issue. If we are serious about meeting the need for affordable housing in rural areas, it will need more than words and rhetoric to build them.

The Earl of Selborne: My Lords, I join with other noble Lords in thanking my noble friend Lord Vinson. Like some other speakers, I declare an interest as a farmer. I should also declare an interest as a trustee funding agricultural research because my remarks will be concerned with the role of agricultural research, particularly that funded by the public.
	It is common ground between all of the speakers so far that the whole agricultural sector is recognised to be in a state of transition—and inevitably so because it was anticipated many years ago with the reform of the common agricultural policy, with the Doha round and with much else besides. Many of us were urging that for a long time and it is irrelevant now to ask whether or not the agricultural sector, the Government or others have put in place suitable measures. However, when the noble Lord, Lord Tomlinson, takes to task those who failed to establish co-operatives, I remember that the first co-operatives were called marketing boards. They were phased out because they were incompatible with the European Union, or the EEC as it was. We had something called Milk Marque, which, can you imagine, had to be closed down because of the unfair competition that the farmers would exert on the multiple retail outlets. That was an example, I fear, of co-operation which should have been allowed, but certainly was not.
	In a situation where the sector is in a state of transition and falling incomes, it is important to establish what you can reasonably ask the Government to do—and I accept that farmers very often are unreasonable in their demands—what it is reasonable for the sector to do and what might be the long-term strategy to which everyone, with some measure of agreement, can sign up.
	In the 1950s, of course, it was much simpler. It was quite clear that the Government and the public knew that food security was an issue and that increased production of safe, nutritious food was clearly required. It was fairly uncomplicated. The farming sector got credit from George Brown and others in the National Plan and "Food From Our Own Resources". A number of measures, which were successful from the point of the view of the consumer as well as the farmer, were used to achieve this. These included capital grants, production support and, above all, investment in agricultural research and development.
	I recognise that we will not go back to deficiency payments, however much my noble friend Lord Vinson might wish it. I recognise also that the imperatives of the World Trade Organisation require us to be highly competitive, albeit very much more environmentally aware than we were in those halcyon days of the 1950s and the 1960s. So there is a very clear and reasonable challenge to agriculture: you have got to be competitive. You are not going to get the same support but the Government can perhaps still help in certain respects—not least in helping to set the vision, the strategy, and in producing a coherent base for research and development. Not all of this, I hasten to say, must be funded by government. Others can and should contribute.
	With regard to the biological sciences funded by the Research Council under the ministerial supervision of the noble Lord, Lord Sainsbury, the Government have achieved a very creditable record. The science base has expanded through funding research councils such as the Biotechnology and Biological Sciences Research Council and the Natural Environment Research Council, which have been able to increase their expenditure in real terms.
	The problem in the agricultural research sector dates back—this may sound as though I am harping back into history—into the early 1970s under Lord Rothschild's customer/contractor principle. Your Lordships may remember that he came up with what I suspect is now a disastrous concept of taking money away from the research councils and giving it not to the farmers or their organisations to spend but to the ministry of the day, which was MAFF—the Ministry of Agriculture, Fisheries and Food. The argument was that the farmers would be incapable of organising themselves to administer this research, and so £19 million was moved out of the research councils and was given to MAFF.
	That was 25 or 30 years ago. What has happened to that money over the years? It has been transferred by degrees to the policy objectives of Defra—a different ministry with highly laudable objectives. The sum of money is now, in real terms, about one-fifth of what it was. So it has disappeared. Lord Rothschild's concept of having a vicarious customer, someone who could act as a sponsor, has been disastrous.
	If you accept my thesis that the agricultural sector, above all, has to be seen to be embracing new technology, taking on the fundamentals of environmental considerations, nutrition, linkages with other biological sciences and contributing to some of the wider objectives of the National Health Service—all of which I believe the research councils are undertaking in a co-ordinated way—you will find that the old Research Council institutes, such as Rothamsted Research, the Institute of Grassland and Environmental Research at Aberystwyth and North Wyke in Devon and the Institute of Animal Health, are withering on the vine. They are withering on the vine because Defra has withdrawn support. It says, "These are not our institutes and not our responsibility. They are the research councils' institutes. We have no overall strategy and do not feel responsible for the redundancies or the lack of ability to maintain this infrastructure".
	It can be argued that by competitive bidding, you can go to universities and get the work done elsewhere and that no one should assume that they have an automatic right to funding from Defra or anyone else. That may be true if you think you can buy the research elsewhere. Supporting a sector such as agriculture needs farms, extremely expensive animal facilities and the infrastructure we were proud of in the 1970s and 1980s but which is now at dire risk. There is every likelihood, because of yet further withdrawal of funding by Defra, that IGER and Rothamsted will be merged into one funding stream. Those further cuts will tell farmers that although they need research and should be funding part of it themselves, Defra does not have the vision to understand how it should be playing its part in underpinning the infrastructure for research.
	We should be proud of our great tradition of agricultural research. We now have new Ministers—I am deeply impressed by the Secretary of State's blog, which I read carefully; it is quite open and transparent. I hope that before the noble Lord, Lord Rooker, gets too deeply immersed in the conventional wisdom of Defra, he will find the time to visit these research institutes and ask them whether they can justify continued funding. If the noble Lord will do that, I will give him no further trouble.

The Countess of Mar: My Lords, I, too, am grateful to the noble Lord, Lord Vinson, for introducing this topic for debate today. I also welcome my old friend—if I may call him that—the noble Lord, Lord Rooker. We dealt with many things together, particularly OPs, when he was at MAFF, and I have huge respect for him. I declare my interest as a partner in our small family farm. I think that the noble Lord, Lord Corbett, would support me in that.
	Farming is in crisis, and I do not use the word lightly. The problems are widespread and have implications for both rural and urban communities. At a time when we have at last acknowledged the importance of countryside stewardship, the financial difficulties faced by some members of the farming industry mean that we are at risk of causing long-term damage to the environment. The appearance of our landscape is inextricably linked with the way in which it is farmed. In many upland areas, for example, bracken and gorse are beginning to dominate. In the lowlands, it is the ubiquitous ragwort that is most obvious. Despite legislation that requires ragwort to be controlled, it is visible in pony fields, on road verges and railway embankments. No one seems to care any more.
	Why is this so? The answer is complex: a combination of failure by government to understand or care about rural issues and an industry with an economically unstable base. The problems associated with the Rural Payments Agency are a small part of the whole, though I hasten to add that, to the beleaguered hill farmers, they are currently dominant.
	It is iniquitous that farmers who milk cows seven days a week to produce milk that is then sold to the supermarkets should receive less than the cost of production. There are many fewer dairy herds in this country than there were 10 or 20 years ago, but the number of cows remains almost stable. This means that fewer people are managing the herds. I listened very carefully to the noble Lord, Lord Christopher. The pressures to improve efficiency drive people to make false economies which may include a reduction in routine, precautionary health measures which, when combined with a reduced inclination to save the life of a sick animal, mean less contact with a veterinary surgeon. They might also cut back on the amount or quality of the rations fed to their animals.
	A smaller labour force means longer hours for those who remain, and the burden of constantly changing legislation makes life no easier. Both the herdsman and the cattle are now functioning under extremely stressful conditions. Serious welfare problems can arise. Is it any wonder that we hear with increasing frequency of breakdowns in both human and animal health?
	The Minister knows of the effects that a herd breakdown with bovine tuberculosis has had upon one family that I know, for I have recently written to him about them. This was a massive breakdown. Since February 2005, they have lost more than 180 animals out of a herd of 260.
	Another family that I know have been under TB restrictions for more than five years. A few weeks ago they finally had two successive clear tests. This meant that the restrictions were lifted. They decided that they would get out of milking while they could, sell their cattle and diversify. They reviewed their cropping programme, decided not to rent any pasture and, as a precursor to the sale, to slaughter a number of older cows. Disaster befell them when the abattoir reported that two of the cows had active TB lesions. The cows had never had a positive skin test in all the five years of repeated testing. They were not even inconclusives.
	The farm is back under restriction. The family now has to return to milking. Their cropping plans are all awry and the grazing land that they formerly rented has been let to other tenants. They cannot just throw in the towel and walk away from the animals or the land, as someone might do in any other kind of business. They cannot sell the animals, except for slaughter. Both families have always co-operated fully with Defra and the State Veterinary Service. Compensation does not replace the loss of their prized animals. What do they do?
	The malaise lies not just in the dairy industry, but with all our livestock industries. Our high welfare standards—as some noble Lords have mentioned—increase the cost of production in both the pig and poultry industries. Sheep farming in the hills is becoming a soul-destroying occupation simply because there seems to be no understanding within government of the role that our indigenous hill sheep play in the production of strong maternal lines for ultimate meat production in the lowlands. Nor do they seem to understand the role that these sheep play in the preservation of the British landscape. British producers' efforts are undermined by the supermarkets and mass catering suppliers who buy cheaper meat and eggs from abroad. They have constant concerns about biosecurity, with diseases that are often the result of poor husbandry in other countries and lax biosecurity at ports of entry—a responsibility of government—threatening their livestock.
	The isolation among farmers is palpable in some rural communities, and can cause long-term mental illness and even suicide. The long hours worked for very small economic return have a direct impact on the way that animals are cared for. It should be remembered that the majority of farmers have an empathy with their livestock—a fact that seems not to be readily appreciated by those sitting in Whitehall. In the aftermath of BSE and the foot and mouth epidemic, they are repulsed by the prospect of further mass killing—euphemistically called culling by Defra—of healthy livestock in the event of avian flu or some other infectious disease. They find it impossible to equate the propensity for Defra to kill healthy animals whilst diseased and sick badgers and other wildlife are allowed to continue to spread bovine TB across our countryside.
	Are we going to see malaise as deep as that which occurred during the slump in world agriculture in the 1930s, with abandoned farmsteads, land left to lie fallow and families who know about tending animals and crops retreating to the cities? It is apparent that farming for food production is very low on the list of priorities for the UK Government, as other noble Lords have mentioned. I do not believe that food security features very prominently in the policies of the EU either. I know that I am not the only person who worries about the effects that a possible oil embargo might have on our food supplies. What are the contingency plans in the event that we cannot get beef from South America, lamb from New Zealand, poultry meat from Thailand or Brazil or vegetables from Africa because there is no transport?
	I do not believe that you can get rid of an industry that provides the staples of life to a population on the basis that someone else will do it for much less, without understanding that, in the event of a supply crisis, there will be no home-grown fount of knowledge and experience to tap into. If we look at present day Zimbabwe, we can get some idea of what happens if novices take over agriculture. To put it baldly, the population starves.
	The Government really must wake up to the effects that their policies, together with those of the EU, are having in both the long and the short term, on human and animal welfare, food security and the landscape. I look forward to hearing the Minister's response.

The Duke of Montrose: My Lords, I add my thanks to the noble Lord, Lord Vinson, for this very timely debate. All of us here could go on discussing the subject for much longer, but we are limited to eight minutes and we must make what use we can of them. This is certainly a period of great contrast because this is the time of year when optimism strikes a high note for the farmer. The leaves on the trees are fresh and green, the grain is well through the ground, the fields are full of lambs and sleek cattle and the magic of nature is all around. I declare my interest in all that we have to discuss today as a producer of cattle and sheep and a member of the Scottish National Farmers Union.
	Within the past month, as the noble Lord, Lord Tomlinson, pointed out, we have finally seen the lifting of the ban on the export to Europe of cattle aged under 24 months. That leaves the industry trying to recover from a catalogue of disasters that go back for 10 years or more. It has been a hard spell for farmers with ever reducing incomes and also for government. We have to be grateful for the generous support, however reluctantly provided. It is easy to forget that one of the aims of the CAP was to bring the level of rural income up to the general level of the population, as the noble Lord, Lord Corbett of Castle Vale, pointed out to us.
	There has been a crescendo of crises—BSE, foot and mouth, now TB and avian flu. We live in a country with a great penchant for regulation and a very variable and tricky climate, so our production cannot compete on price alone. As the noble Lord, Lord Vinson, pointed out, we produce only 62 per cent of the food that we require.
	However, the future of our livestock production has to come from our ability to produce a quality product. The new regulation allowing for export to Europe applies to cattle and carcasses under the age of 24 months. That has already triggered an increase in the general price of cattle by 8p per kilo carcass weight and has also been reflected in the price of sheep, which gives some welcome relief to the industry. But current production within this country has been geared to produce cattle of up to 30 months and these are rated as totally acceptable for human consumption. That now leaves a great tranche of cattle between the ages of 24 and 30 months that can qualify for that premium export market only if the beef is boned and packaged. For all the effort and expense that this takes, what is left is then regarded in the trade as a second-rate product and any premium that might have been gained from quality is lost. Are the Government planning to tackle this anomaly with our European partners? There does not appear to be any scientific basis for excluding the cattle aged up to 30 months. Are meetings scheduled at which the subject can be raised?
	In Scotland, we have just lived through the first incidence of H5N1 bird flu in this country. Norfolk has seen another variant. We can only consider ourselves very fortunate that it never spread beyond the first case. We still do not know what would happen if the disease was carried in by a live bird. The remarkable thing is that for once, despite an animal disease, there does not appear to have been a drop in consumption in the United Kingdom. That has not been the case for Europe, however, and the oversupply of poultry products has meant a severe cut in the price. The Minister will be aware that the EU Commission is allowing that governments may give assistance to producers who have suffered. Will the Government be holding meetings with representatives of the industry to assess whether any assistance would be appropriate?
	Another great concern is the perverseness when European regulations are implemented with a literal interpretation, such as seems to be our speciality, and achieve the opposite of their purpose. The most outstanding current example is the waste incineration directive, where anything that is not a primary product of a process is liable to be classed as waste. This has led to the banning of the burning of tallow in most rendering plants. They were then going to be forced to burn heavy engine oil to heat their processes instead of tallow, which is a locally produced and green, renewable fuel. I understand that this has been put on hold at the moment, but one wonders how long it will take to get some resolution from Europe to let people know what the future should be. Agriculture has always been a great utiliser of these secondary products, now considered waste, as well as a producer of a number of others from its own processes. There seems to be a case for a special classification of these materials so that everyone is not forced to go running around constantly looking for special licences.
	The Scottish NFU has drawn my attention to the purpose of the EU water framework directive, another EU regulation, which is there to ensure that all water bodies are of good ecological quality by 2015. That concerns areas where water shortage raises environmental questions about water use. This issue must apply in many areas of England and Wales as it does in Scotland, where there is high rainfall and volumes of water are satisfactory. In those areas there is no need to have the trouble and expense of licensing abstraction and impoundment, unless it is to compound the sea of red tape that surrounds us. That particularly applies to agriculture. I have to accept that in England and Wales the regulation is more generous than the one we have up north, in that it allows a de minimis level of 20 cubic metres without a licence. Even so, it bears consideration.
	As with so many of the stipulations of cross-compliance, and as was pointed out by the noble Earl, Lord Erroll, it would be reassuring to think that the Government were giving some thought to the cost of implementation. Perhaps it is worth noting the figures that have been supplied to us by the Country Land and Business Association, which reckons that regulation imposes a cost of approximately £1 billion on an industry with a turnover of £8 billion; that is, of small and medium-sized businesses in the rural economy.
	The production of the countryside may need some redefinition or refocusing, and it may need some guidance on useful ventures, but we should never lose sight of the central role that meaningful production plays in keeping the countryside as a living and vital part of the whole rural economy.

Lord Young of Norwood Green: My Lords, I thank the noble Lord, Lord Vinson, for enabling this opportunity, congratulate—if that is the right word—the noble Lord, Lord Rooker, on his new appointment and commiserate with the noble Lord, Lord Bach, for the reasons that other noble Lords have stated.
	How we relate to agriculture as a society in a national and international context in a truly global world is rightly the subject of intense and continuing debate. If, like me, you are a townie whose knowledge of agriculture is limited to a bit of vegetable growing in the garden, and probably too influenced by my addiction to that daily dose of rural life as portrayed in "The Archers", you enter this debate with a suitable amount of caution.
	With my trade union background it is hardly surprising that I should pose the almost eternal question: what about the workers? But it is surely appropriate given the role of the Tolpuddle Martyrs, those Dorsetshire farm labourers who were transported to Australia in 1834 for the heinous crime of trying to form a trade union.
	Next year, 2007, we will rightly celebrate the 200th anniversary of the abolition of slavery, but I put it to noble Lords that the task is not yet finished. In the 21st century, people can arrive in the UK from the EU or as immigrants or illegal immigrants and be subjected to conditions akin to slavery. Some, having paid for their transportation in appalling conditions and paid again for the prospect of a job, will have incurred debt which will take them possibly years to repay. Effectively, they are in bondage. Passports will be confiscated or forged papers provided at a price. Those people will be herded together in housing conditions that are both unsafe and unsanitary, and forced to work long hours in unsafe conditions. They will be transported to work in vehicles that are overcrowded and unsafe, sometimes resulting in fatal accidents, and denied basic employment rights such as health and safety, holidays and the minimum wage.
	I am, of course, referring to temporary or migrant agricultural workers in the UK, which, at a rough estimate based on government and union figures, amounts to 600,000 people, who are now covered by the Gangmasters (Licensing) Act. Some 22,500 businesses use temporary labour and there are about 1,000 labour providers in the agricultural sector. By any standards this is big business which, given the criminal elements involved in the appalling abuses of workers, was in dire need of reform. I put this in context. Not all gangmasters are criminals and most farmers, suppliers and retailers were trying to ensure fair conditions for temporary labour, but it was an appalling situation, ripe for exploitation and well overdue for reform.
	I must declare an interest in this issue as the vice-chairman of the Ethical Trading Initiative, an alliance of companies, NGOs and trade unions which exists to identify and promote the implementation of good codes of practice in company supply chains, taking the ILO conventions as the basic reference. This organisation, ably led by its director Dan Rees, played a key role in the creation of the gangmaster legislation.
	The Government have come in for a lot of criticism in this debate, but in that area they deserve praise. They reacted quickly to Jim Sheridan's Private Member's Bill. As a result, one of the most complex Private Member's Bills was steered through Parliament inside six months. That was some achievement. Defra and the Department for Work and Pensions have been working closely with the Ethical Trading Initiative since 2002—which led to the creation of the Temporary Labour Working Group—to design a code of practice for labour providers and methods to assess compliance with the code. That code of practice was the forerunner to the licensing conditions that the Gangmasters (Licensing) Act subsequently adopted. It recognised the Temporary Labour Working Group method of auditing gangmasters for compliance with the code. It has adapted its audit method and even intends to use its auditors in some of the inspections. Very good progress has been made in that area. It is a very good example of all parts of an industry working together.
	The Temporary Labour Working Group was a feat in itself. The Ethical Trading Initiative co-ordinated the efforts of six supermarket competitors, the National Farmers Union, the Transport and General Workers Union, the Association of Labour Providers and trade associations representing packers and importers as well as food manufacturers. To get a group as diverse as that to co-operate in producing, dare I say, more regulation is a major miracle, but in that case regulation was very much needed.
	In 2004, the Temporary Labour Working Group audit programme was established; previously it had been a trial. The intention was to prepare as many labour providers as possible for regulation and to improve standards in the industry in the mean time. It has been successful; 800 labour providers have been identified, and 450 audits have been carried out in 2005-06. We welcome the announcement by the Government on 13 March of the new gangmasters licensing regime. The Gangmasters (Licensing) Act will apply to the provision of labour across the entire food sector and urges industry to act now to prepare for licensing.
	From October this year, labour providers will need a licence if they supply labour to any farm, packhouse, or food processing and manufacturing facility. The Government announcement is exactly what the food industry wanted; a level playing field across the entire sector with the licensing applying to businesses, which supply an estimated 600,000 workers to the sector. The licensing imposes new checks on employers to verify that workers are employed legally, are paid the minimum wage, work reasonable hours and work in safe conditions. The legislation is a wake-up call to all labour providers in the food industry and those that use their services. The DTI has encouraged labour providers to put their houses in order so that they can rectify any issues before licensing comes into force.
	We hope that the legislation will help to prevent tragedies such as the Morecambe Bay disaster on 5 February 2004, where 23 Chinese migrant workers drowned picking cockles just to supply food for our table and for the export market. It was a terrible indictment for that to happen in this century, and that is not the only tragedy that has taken place. There has been much progress. I quote the Minister when he was replying to debate in Grand Committee:
	"At the latest date for which I have figures, 81 licences have been issued and there have been 295 applications. The licensing authority is to be congratulated on working from a standing start".—[Official Report, 16/5/06; col. GC 67.]
	I agree. There has been a bit of delay in the shellfish industry because of the complexity of that industry, and we hope that the Minister will do all he can to ensure that regulation comes in as quickly as possible.
	Finally, I congratulate all those concerned. A lot was achieved with a voluntary code by responsible producers, suppliers and retailers, but as we can see from the cross-party consensus on this issue it was not enough, given the level of exploitation and criminal elements involved. If we are to prevent further exploitation and more tragedies such as Morecambe Bay, I hope that the Minister will ensure that the Act is rigorously enforced and that those who try to evade the regulations are brought to justice. I thank the noble Lord, Lord Vinson, once again.

Lord Plumb: My Lords, I, too, thank my noble friend Lord Vinson for initiating the debate on the state of British agriculture. It is a timely opportunity to review the farming industry's position. I very much welcome the noble Lord, Lord Rooker, to his place on the Front Bench representing agriculture. For both of us this is like recycling; we have been eyeball to eyeball in the past—I was wearing a different hat in those days—but I wish him well in his new responsibility. I join everyone in thanking the noble Lord, Lord Bach, for the work that he did in a very short time. He was certainly not responsible for some of the difficulties that we face at the moment, and he became a good friend to many of us.
	I declare my interest as one of those elderly farmers who my noble friend Lord Peel referred to earlier; I need my single payment. I also declare the various bodies involved in agriculture, politics and commerce that I have been and continue to be involved in. I am proud to be the patron of the Cotswolds Conservation Board, which is concerned with the preservation of the countryside. The noble Lord, Lord Rooker, spent some hours with me across some of that countryside not so very long ago looking at what was being done.
	Noble Lords are familiar with the sorry tale of the failure of the Government to pay the bulk of the single payment scheme by the end of March, as had been repeatedly promised by Ministers. I hardly need to reflect on the increased costs for many farm businesses—the stress that that caused them and many other businesses supplying the inputs. I hope that the Minister can deny the statement made in the European Parliament requesting an extension until 14 October before final settlement is made. If it is true that 85 per cent of farmers have received the single payment—I understand that £213 million is still to be paid, and that more than 5,000 farmers are waiting for the full payment and some are waiting for part payment—it is essential that those outstanding bills are settled and that payments are completed, and that it is ensured that the 2006 payment is not at risk and that all payments are made by 30 June. What would be the position in Brussels if that did not happen?
	As other noble Lords have rightly said, the farmers' cash flow is probably at an historic low, for reasons outside their control. I hope that the Minister will accept that the estimated debt in farming is calculated to be £12 billion. If we take the low value of the euro against sterling for trade in Europe, the estimated loss is something like £3 billion—yet we talk about the freeing up of trade with other European countries. Many farmers might say that we should follow the lead of the Chancellor of the Exchequer and put surcharges and interest on late settlements of the single payment, as the Treasury does on late returns or late tax payments this year.
	However, farming is not just about the single payment. Planning for change is hardly an exact science, but it means that every opportunity has to be taken to look at the potential for new products for modern consumers, particularly in the energy market, and to learn to diversify, as farmers are doing. It is difficult to bracket farming into one operation when it has become so diverse and so specialised, and the market so globalised. If there is a food deficit in this country of £13 billion and we see self-sufficiency falling in the past 10 years from 74 per cent of our own market to 60 per cent, surely we must look at the market itself and do something about it. I accept that that is a responsibility that farmers must take for themselves.
	Food safety and security does not seem to register, as the noble Lord, Lord Christopher, said. There is always a risk of importing diseases such as avian flu, salmonella and foot and mouth, as we know to our cost. TB continues to spread like wildfire across the countryside, while the Government appear to wring their hands in despair. I know that scientific evidence comes from both sides, and that the position is extremely difficult. The cost of one pre-movement test for farming is of some help, but it is like shutting the stable door after the horse has bolted. It is a tragedy that could have been avoided if action had been taken 10 years ago.
	Farmers accept that they are in a risk business. Their products, either from the land or the animal, are subject to disease or the vagaries of the weather. In response to the demand for quality food produced from environmentally friendly farming, they welcome the announcement by the Office of Fair Trading to refer the grocery market to the Competition Commission. Does the Minister agree that analysis of the impact that food retailers have on producers might also be considered as part of that? The mind boggles when a producer is getting 18p a litre for his milk and it is sold in the supermarkets—at least, in the one that I use not far from my flat here in London—for 79p. The other day, I saw organic milk being sold at 99p a litre.
	While cash flow and market returns remain a major problem, agriculture continues to be the recipient of yet more regulations designed to bring farming into line with controls applied to other businesses and other industries. Plastic and card packaging, which the noble Duke, the Duke of Montrose, mentioned, is covered by the waste directive, and demolition and machinery waste is classified as controlled waste. These changes have implications for all farm businesses and add further cost to the present enforcement of regulations.
	We are well aware that there are tough times ahead and we have to accept that sleep-walking into the future, dictated only by today's financial and trading giants, would be disastrous. Many areas of the country are successfully promoting sustainable food, and I am a great believer in localised food production and processing.
	I want to mention one thing outside this area. Farming land in the future will be about more than just producing food. Last weekend in Budapest I attended a conference which brought together people concerned with the World Trade Organisation and with where we are heading. The theme of the conference was producing products for biomass and biofuels for heat and so on. The whole emphasis worldwide, therefore, is on renewable energy from crops, and we are aware that various reviews are taking place. We are aware of the energy review taking place, and I was encouraged by the Prime Minister's comments to the CBI.
	Industrialised crops can play a vital part in the step-change towards energy efficiency. We either keep up with the rest of the field or we give a lead in reducing CO2 emissions. I read in a recent report that, in an age of energy efficiency, we waste enough heat in power stations to heat the whole country for free; that we reuse only 1.4 of 5.6 million tonnes of reclaimed timber, with the balance going to landfill; that we have failed to recognise the energy resource in waste materials; that we have failed to recognise the need to consider the options for renewable heat; and that our forests could become more viable through the use of woodchips. It seems that the biggest barrier is ignorance.
	Finally, for the first time in my life, production is free from the shackles of commodity support. The cheap food policy that we have had in the past has gone and the Government's ability to control production has therefore been reduced. We are on our own, and I believe that farmers will, and must, take responsibility for controlling their destiny in the future, particularly in marketing their goods.

Baroness Farrington of Ribbleton: My Lords, we are running into a difficulty between exceptional quality and regulation of time.

Lord Grantchester: My Lords, I am very pleased to be able to contribute to this debate today, coming as it does at a critical time during the process of transforming agriculture from being production and subsidy-driven to being market-focused and responsive. I thank the noble Lord, Lord Vinson, for introducing the debate.
	I join other noble Lords in paying tribute to my noble friend Lord Bach. Working with him on the Natural Environment and Rural Communities Bill, I found him approachable, helpful and extremely courteous. Turning to the Front Bench, I give an immediate welcome to my noble friend Lord Rooker, with his renewed responsibilities, and to the new team at Defra.
	I often think that agriculture makes an ideal area to attack whichever government are in office. After all, we have had a succession of diseases and disasters to contend with against a backcloth of dialogue with our European neighbours about the common agricultural policy. The list reads: TB, brucellosis, IBR, leucosis, BSE, foot and mouth, and TB again, with some diseases being more political than real.
	It is a risky business, where the Government must foster conditions that produce stability and maintain a balance between competing demands. We have often had debates in your Lordships' House about whether the glass is half full or half empty. The Government, facing the issues of environment, food and farming, have steered, by and large successfully, along a course of sustainability.
	I shall try to give the perspective of a dairy farmer in Cheshire, a director of Dairy Farmers of Britain—a co-operative of some 3,000 dairy farmers—having been president of the Royal Association of British Dairy Farmers, and chairman of the Cheshire county Country Land and Business Association. The process of change through reform of the CAP is posing severe challenges. The long-term nature of agricultural decision-making requires time for transition. The statistics of 2005 mirror this trend and highlight the severe, critical economic conditions.
	Total income has fallen by 8.9 per cent in current prices, 11 per cent in real terms. Average producer prices of agricultural products fell by 3.2 per cent. Total value of output fell by 1.6 per cent. Prices are now 21 per cent below the peak of 1995. The farmers' share of food prices has fallen by 23 per cent between 1988 and 2005. Since 1998, food prices have risen by only 8.5 per cent, whereas the oil price index is up by 22 per cent. In contrast, in 2005, the average price of agricultural inputs rose by 1.9 per cent. Farmers can only survive by increasing productivity, reducing their unit costs. In 2005, productivity continued to increase by 7 per cent. The result is that 66 per cent of net farm income is less than £20,000. The average full-time farm employee net income is a pitiful £12,500.
	Within this average, sectors have had varying results. Cereals have fallen by 6.7 per cent where other arable crops are up by 6.6 per cent. The value of wheat production has fallen by 19 per cent. The dairy herd has fallen by 3.1 per cent, whereas beef is up 1.6 per cent.
	What sort of agriculture will survive? What are the major sector challenges and what actions can the Government take to facilitate success? The immediate challenge is to rectify the implementation of the single payment scheme. This is a failure of administration, not policy. The Government will be proved correct for deciding on a dynamic hybrid model, rewarding farmers for environmental enhancements rather than according to some historic position. This is not to belittle the severe economic impact that the delays in payments have brought to the countryside. Agriculture's borrowing in the first quarter was a record £9.5 billion, an increase of 11 per cent year on year. While the banks have been responsive, the increase in the drain on resources nevertheless puts real investment under threat.
	The payments agency is to be congratulated on the fast implementation of partial payments to relieve the situation. I understand that 85.8 per cent of expected total payments have now been paid. Perhaps the Minister can confirm the up-to-date position, priority to claimants for the hill farm allowance and that all payments due will be completed by 30 June. Looking ahead, can the Minister look to make partial payments for 2006 in December of 2006, to boost farmers' confidence that difficulties will not be repeated?
	The problems with the mapping process are still to be resolved. Can the Minister report on the progress being made? This is a vital element in many of the environmental schemes for modulated money, and is holding up applications for the entry-level scheme. In 2006, the overall modulation rate will be 10 per cent, up from 5 per cent in 2005. There are fears that the modulation rate could reach 20 per cent in 2007. Can the Minister look at freezing the current rate, and report on Defra's discussions with the Treasury to confirm 100 per cent matched funding, in the light of the impact these deductions will have without commensurate uptake for modulated money?
	Within the dairy sector, the challenge lies in the food chain. Supermarkets, capturing an ever-increasing proportion of sales through their position and consolidation, have subjected the supply chain to ever-increasing deflation, as the statistics show. Dairy farmers recognise that scale is imperative along the supply chain. They also recognise that adding value to their raw product is necessary to capture more of the end price. The Government are to be congratulated on setting up English Food and Farming Partnerships to promote co-operation and investment. Can my noble friend confirm that this funding will continue?
	To achieve scale in production, businesses need confidence to invest. They need confidence that the competition laws are not going to institutionalise their weakness in the supply chain. The co-operative Dairy Farmers of Britain has set a strategy to shorten the supply chain and create brands to offer value-for-money products. Producers must invest, often only to safeguard their position and their vital supermarket contracts, and often without the luxury of expecting higher profits. It is the supermarkets that have the relationship with the consumer, and all that remains for the supplier is to be as efficient as possible and one step ahead of what the supermarket wants. If consolidation cannot proceed to match the consolidation at the retail end, innovation and investment will be jeopardised. In this regard, it is to be regretted that the farm diversification grants are not set to continue to allow time to meet future challenges.
	In the livestock sector, both beef and dairy, the immediate challenge concerns TB. Your Lordships have debated this topic at length and the industry still looks to the Government to make effective decisions to bring this under control. The problem in wildlife—namely, the badger—must be addressed. It is my belief that the spread out of the south-west and up the west side of England and Wales is commensurate with the development and growing of maize further north. Badgers enjoy maize, increasing the interaction between cattle and themselves. I am continually approached about the inadequacies of the tabular compensation scheme. The higher-value pedigree breeder cannot risk-manage his herd, and his trading ability is compromised by such simplistic compensation.
	In the beef sector, the lifting of the ban on the export of British beef on 3 May is a huge Government success, some 10 years after the BSE crisis closed the overseas markets. The OTMS is also being wound down and prices have been maintained. One consequence of this is that the first load of calves has just been exported. However, the challenge remains of reducing the amount and scope of regulation. Perhaps my noble friend can look at some of these regulations, which are a consequence of taking "short cuts" necessary to make businesses work.
	Agriculture is in transition. The future lies in tackling costs, building scale, innovating and adding value. As the population becomes further separated from agriculture and the countryside, I pay tribute to the educational charity Farming and Countryside Education, which is behind a scheme to create a whole curriculum year of activities centred around food and farming, supported by the Department for Education and Skills. The work of Jamie Oliver in underlining quality is also important. These are positive signs that point the way for agriculture to prosper.

Baroness Farrington of Ribbleton: My Lords, even the noble Lord, Lord Plumb, is drawing attention to the clock.

Lord Grantchester: My Lords, I am sorry. These are positive steps in the countryside. Much has been achieved and I look forward to further progress continuing.

Lord Marlesford: My Lords, we owe a debt of gratitude to my noble friend Lord Vinson. I learnt of his deep insights into the rural economy when I sat as a member of the Rural Development Commission under his chairmanship some 15 years ago. As a Suffolk farmer, I warmly welcome the noble Lord, Lord Rooker, as he takes over responsibilities for Defra in this House.
	Let me say a word about when Ministers should resign. It is rare that major maladministration is a Minster's direct fault. Civil servants have their own agendas and, when things are going wrong, like anyone else they will conceal their incompetence for as long as they can. That is why it is so crucial that Ministers keep a real grip on their departments. Civil servants always try to keep Ministers at arm's length by methods exposed long ago in "Yes Minister". But when there is a major scandal about departmental administration, the Minister should resign—not to accept blame, but to enable the successor to insist on having a better grip on the department.
	As far as Britain's farmers are concerned, Defra has been an unmitigated disaster. The Rural Payments Agency has been a scandal. It deceived its Ministers, who then misled the whole farming industry. I believe that Mrs Beckett should have resigned; instead, she has been promoted. We understand the reason: the Prime Minister wants to be his own Foreign Secretary and she will be a compliant tool to that end. Mr Hoon has sensibly been appointed to do the real work on Europe. I believe that the noble Lord, Lord Bach, was hard done by. I always thought he was an effective Minister at defence, but he was not able to get a grip in time to prevent the Defra RPA debacle.
	The noble Lord, Lord Rooker, has heavy boots. I have respected him for years, ever since 1975, when he nearly got me expelled from the Palace of Westminster for six months for putting into the Economist the secrets of a House of Commons Select Committee before it was ready to publish them. I believe that he will get a grip on Defra. David Miliband is one of the best in the Government and is perhaps a future leader of his party. He will need to get some mud on his boots, which Mrs Beckett, from the shelter of her caravan with her pre-packaged Tesco food, never really did. But if Mr Miliband is to reverse the widespread disillusionment with the Government in the rural community, he will have to take some strong action. I have one preliminary suggestion for Defra Ministers: get a full-time permanent secretary. The present incumbent may be a bright lady, but to allow a big department that has performed as badly as Defra to have a part-timer in charge for the sake of political correctness is as about sensible as recruiting the disabled to the SAS.
	British farmers today do not have an effective spokesman. When I worked for Fisons, my first boss was a giant: Jim Turner, later Lord Netherthorpe and head of the NFU. I am not a member of the NFU, so I have no interest to declare, but I do not believe that we have had anyone who has really stood up for farmers since my noble friend Lord Plumb. As an article in the current issue of Arable Farming by the current NFU president Peter Kendall makes clear, the present regime prefers to lie snugly in bed with Defra officials and encourages its leader to bask like a schoolboy in a photo opportunity with the Prime Minister and Mrs Beckett on the steps of Downing Street and to express his deep appreciation to the Prime Minister for sparing him the time of day.
	Let us face the fact that British farming is now in as deep a recession as it was in the 1930s. I shall use one figure to demonstrate that: the price of wheat. The current price of feed wheat for the 2006 harvest is about £68 per tonne. It was less than that for the 2005 harvest. Five years ago, it was well over £100 per tonne. If we relate today's prices to 1935, we have to divide by 38 to adjust for inflation and multiply by four to allow for the increase in yields from perhaps a tonne an acre to perhaps 4 tonnes an acre. That brings the price of wheat back to the equivalent of £6 to £7 per tonne in the 1930s, which is what it was in those days and wheat costs in excess of £70 per tonne to produce, even for efficient farmers.
	The drastic fall in wheat prices is mirrored in other farm products. The price of oil seed rape has nearly halved. As my noble friend said, milk costs at least 20p per litre to produce. Even small family dairy farms in the west country where they barely cost in their own labour now live at subsistence level. Five years ago, the price of milk was 24p per litre and milk was modestly profitable; the price is now a shaky 18p. Earlier this month, I drove down to Cornwall; there was hardly a cow to be seen on the route, whether in Somerset, Devon or Cornwall. Only about half the milk produced in the UK is consumed as liquid milk, so supermarkets can continue to use milk prices as a weapon in their competition wars. That will mean more butter, cheese and other such products being imported.
	Let us not forget that the crucial difference between the old arable area payments scheme under the CAP and the new single farm payment scheme is that while the cash paid out will, to start with, be approximately equal between the two, the SFP demands environmental expenditure which was not previously required—all very nice and good, but it is a net loss of revenue to the farmers.
	So, what do I ask the Minister to do? First, review the regulations which surround the single farm payment. Many of them are either invented by Defra or gold-plated by Defra. They are not part of EU regulations. Let me remind the noble Lord, Lord Rooker, that last week the new German chancellor Angela Merkel called for a 25 per cent reduction in EU regulations.
	Secondly, I ask him to halt the arrogant way that Defra communicates with and threatens farmers. To see what I mean, let the noble Lord, Lord Rooker, look at the wording of some of the forms and instructions which farmers receive. A Suffolk farmer, Mark Horvarth, is taking Defra to the High Court to challenge the wholly disproportionate penalties for any transgressions of the Countryside and Rights of Way Act, which have to be applied to farmers in England but not to farmers in Scotland or Wales. Let the Minister pre-empt Mr Horvarth by withdrawing those penalties.
	Thirdly, let the Minister review the vast number of wholly unqualified busybodies, some of whom are said to have been shelf stackers from Tesco, who have been recruited to enforce these complicated details of a new single farm payment scheme, as devised for English farmers.
	I have suggested that the noble Lord, Lord Rooker, along with Mr Miliband, has the opportunity of making the Government much less unpopular in rural areas. So I suppose that, from a strictly party-political point of view, I would have been better not to make this speech.

The Earl of Caithness: My Lords, I agree with all the previous speakers who have said that the current situation of and the future for farming in the UK is dire; but it is especially so for those in the more marginal areas where diversification is harder and where the population is less, particularly in the north of Scotland. I am allowed to mention Scotland in this debate because, thanks to my noble friend Lord Vinson, this Motion was framed in terms of "British" agriculture.
	It is essential that as we move forward to a more market-placed economy for farmers, the industry can compete effectively on cost, with cheaper available imports which potentially do not reach the same standards of production. On costs and returns it is sobering to appreciate some of the problems some farmers face. I would like to pick up on what my noble friend Lord Marlesford has just said by highlighting two. In 1971, when I made my maiden speech on the role of agriculture in the Scottish economy, the average price of winter wheat was £32 per tonne. It has now doubled to £60 per tonne. In contrast, the average price of compound fertilizer then was £38 per tonne, which has now quadrupled to £142 per tonne.
	For there to be a future, psychologically farmers need to feel that the Government are behind them, not in a financial sense but in a supportive positive sense. I agree with my noble friend Lord Peel that this has not yet been demonstrated by this Government—indeed, quite the opposite. Allowing producers to be able to produce food cost effectively is essential and leads me to the issue of gold-plating Brussels's legislation; a factor that in most cases increases the cost of production for farmers in order that they can meet the rules as they are interpreted in this country. In the process, this often also shifts the focus from the practicalities of quality production to ensuring a high requirement for administration. The noble Earl, Lord Erroll, vividly told us of some of the headaches that he and his wife are currently encountering, and some of the happy hours he is spending trying to sort out the problems.
	Two examples illustrate just how over-regulation has the potential to harm farm business. The first is the EU waste incineration directive, mentioned by my noble friend the Duke of Montrose. The worthy aim of this directive is to prevent or to limit, as far as is practical, negative effects on the environment and human health from the incineration and co-incineration of waste. However, due to the onerous and unnecessary burdens it imposed, the consequences for farmers' costs, climate change and the environment generally were all negative. The industry convinced the Commission of its case and, although committed to reviewing legislation in due course, the Commission made it clear that the situation could be resolved at member-state level. I understand that 22 member states have done so, and have agreed that tallow can continue to be used as a fuel. It was only in early May that the UK Government finally agreed that the status quo could remain in this country until the EU produces its review report. The Government eventually ended up with the right decision, but that decision took far too long to take and is a good example of how the UK lags behind the other EU member states when it comes to the sensible application of legislation.
	The second is the EU water framework directive, which my noble friend the Duke of Montrose mentioned. The net result of that directive, as it is interpreted in Scotland, is that it is most unlikely that any fruit or vegetable grower would be prepared to absorb the extra costs that will be incurred. Production could not expand in the first instance to meet the cost, and it would fall in the long run because of the need to rotate sites. As we all know, Scotland is not generally short of water, but the perverse effect of these proposals will be to drive the production of crops that may need irrigation to other countries with less plentiful supplies of water. It will also defeat many of the Government's other objectives. As so often with MAFF, and now with Defra and the Scottish Executive, it is depressing how little thought is being given to how life will actually work in practice.
	The Hampton review on the regulation of business was published with the 2005 Budget, with recommendations accepted by Government that include: regulators using risk assessment to concentrate resources on where they are most needed, thus lightening the load for those who comply; regulators communicating better with each other to avoid duplication and inconsistency; inspections only where there are reasons for them; and fewer regulators. Mr Hampton highlighted the conflict between the need for advice, which is very important for farmers working mostly on their own and having to digest a wide range of often complex regulatory requirements, and the fear of enforcement action. Sadly, only part of the report applies to Scotland, so there is unequal treatment among UK farmers, which is yet another complication.
	Hampton recommended reducing 21 of Defra's inspection and enforcement functions to six new thematic regulators: the Environment Agency, Natural England, the animal health agency, the agriculture agency, the Food Standards Agency, and the Health and Safety Executive. In principle, it must be desirable for businesses to have fewer regulators to deal with, but can the Minister say what progress is being made in advancing their detailed implementation proposals for this important restructuring? Bigger bodies could simply mean bigger bullies for those being regulated. Can the Minister assure the House that the enforcement of regulations by the new regulators will be fair and proportionate? Defra has committed itself to reducing the administrative burden on business by at least 25 per cent by 2009. Given the new raft of regulations descending on farmers, such as agricultural waste, EU emission standards for farm machinery, integrated pollution prevention and control, livestock registers and electronic sheep ID, does the Minister believe that the department is on track with regard to farm businesses, which Defra has accepted are disproportionately exposed to higher compliance costs compared with larger businesses, and which are in no position to pass on these costs to their customers?
	The farming industry supports the whole-farm approach to regulation, whereby farmers who sign up to this internet service should have fewer forms to fill in and fewer inspections. They should also be able to check online the information that government agencies hold on their businesses for different purposes, such as animal records, habitat maps, water-catchment area data and land designations. In theory, the system should also accommodate single payment scheme information, farm census data, waste licence exemptions and a range of other items that farm businesses have to deal with. How many farmers have Defra attracted to the scheme since its launch in late March, and is the Minister confident that the IT systems adopted for the whole-farm approach will be up to the job, given the cautionary tale of the RPA's difficulties in delivering payments?
	Farmers have suffered a succession of terrible years, as the noble Lord, Lord Grantchester, ably demonstrated. The future is bleak, but the Government can do something to help if they put their mind to it and in a way in which they have not done to date.

Lord Livsey of Talgarth: My Lords, we have had a very wide-ranging debate, and I thank the noble Lord, Lord Vinson, for introducing it as he did. I apologise for the absence of my noble friend Lady Miller who, with EU Sub-committee D, is looking at biofuels in the West Country. That is where I thought that I was going to be before I heard about this debate late last week.
	I associate myself with the remarks that have been made about the noble Lord, Lord Bach, who was the victim of what he was told about the RPA. There was a lot of economy with the truth in the information that he received, and he was very hard done by. I welcome the noble Lord, Lord Rooker, although I have already done so twice.
	The debate is on the current state of farming in Britain. We have heard an awful lot about the Rural Payments Agency debacle. We have had a discussion of that recently in this House, and I do not want to go over the ground that I went over then. However, it is very important to make the point that the 5,000 who have not so far been paid should be paid the single farm payment by 30 June. Many of them are hill farmers who are in desperate need of those payments.
	I repeat what I said in the RPA debate—that I have considerable reservations about the agency's situation. Apparently, the costs of the administration of the RPA this year will be some £250 million. It will cost one-quarter of a billion pounds to administer the RPA! The cost of administration has doubled in the past 18 months, which is an extraordinary state of affairs. We must ask ourselves whether that is value for money. A similar thing is happening in the NHS, where £1.1 billion is being spent on an IT project that does not appear to be working properly. From what the Minister said recently, I know that an investigation is going on; I hope that it is very focused and objective.
	The situation confronting British farming is very mixed. Some sectors are beginning to show signs of promise, while others are absolutely flat on the floor. The RPA issue has compounded the situation. On a product marketing basis, milk prices remain depressed. We have to record the fact that between 1,500 and 2,000 dairy farmers still leave the industry every year, which cannot go on. Cereals have not moved upwards in price for decades; if anything, the price has reduced to values that I used to budget on decades ago. Beef is starting to benefit from the opening up of the European and other export markets as a result of lifting the export ban, which is a very good thing.
	One structural problem is that young people have left the industry and the farming sector. As someone who has been president of a young farmers' county branch for the past couple of years, I know that there is great potential for young people in the farming industry to tackle the competitive culture that is now coming in. In our area we have done a lot of work on farm diversification; indeed, we have run competitions to produce a wider variety of income streams into the farms. So there is depression, but there are also some signs of hope, so we should not be too downbeat. There is a challenge which, as people have already said, the farming industry has met very well from time to time—and it is well capable of doing so.
	One of the most important issues that has, rightly, been put forward in this debate, is the whole issue of food security. It is a very worrying situation. When we consider the rate of 63 per cent self-sufficiency and 73 per cent indigenous self-sufficiency, we can see that the drop in the UK's ability to produce its own food is really a very serious matter. Imports have risen. There is no doubt that were farmers to be given the challenge to produce more in better market circumstances, the balance of payments to the Exchequer could be improved by at least £20 billion. That is a significant sum of money which could have very beneficial effects.
	I am particularly concerned about the world-wide potential scarcity, as there is already, in food. I believe that as a natural resource it is as important as oil, if not more important. Undoubtedly, there is a food production gap, as there is an energy gap, in the world. We would be very foolish not to address that as being extremely important. We can play our part. However, we have to have a proper market in which to operate. Frankly, the exploiting of the market-place by some of the richest supermarket chains in the United Kingdom is totally unacceptable. Local economies have been marginalised. The transporting of food halfway around the world has also had a very bad impact on third world countries. This has to be tackled bravely.
	The profitability of supermarkets—including Tesco with profits of £2.3 billion, which is equal to almost the whole net profitability of all British agriculture—is an unacceptable state of affairs. The investigation by the Competition Commission must look at the exploitation of primary producers. Only 8p in the pound spent in supermarkets goes to the primary producer. The rest goes elsewhere. On looking at information that came out this week, in March, the retail price of milk was 51p a litre and producers got 18.35p. That gives a differential of 32.5p a litre, which went somewhere other than to the primary producer. Across the EU, it is reckoned that only 27p per litre farmgate price is required for dairy farmers to make a profit. That would still allow a 24p a litre supermarket margin under the present situation. This is totally unacceptable.
	I have long thought that the activities of accountants in those big firms have already discounted the value of direct farm support coming from government, and that they have ended up with the money and the farming industry has not. I am sorry to be so outspoken, but I believe that that is, generally speaking, the situation.
	On looking at farm incomes, a question was asked on Monday about pay rates in the United Kingdom. The UK average was £431 a week, which works out at £22,400 a year. In my country, Wales, the average was £390 a week—£20,280 a year. I have to tell noble Lords the average farm net incomes in Wales over the past 12 months: milk producers averaged £20,000; less favoured area grazing livestock, £16,400; and lowland grazing, £8,100. They are all below the income that everyone else earns. The average is £15,700 a year. There is something radically wrong in the way in which the market of primary produce is operating.
	The Government must insist that the Competition Commission looks at the primary producers supplying the food chain, as well as small grocer's shops. When we produced a lot of information on this in 1999, I was involved in the other place in primary producer prices. It ended up with a report saying that it was fair to consumers and there was not a single mention of what happened to the primary producer situation.
	A lot of important speeches have been made today. The noble Lord, Lord Corbett, was right to concentrate on affordable housing because it is a very central issue, and I remember reading his articles in Farmers Weekly many moons ago. The noble Earl, Lord Selborne, made a crucial speech about the importance of agricultural research and research council funding for it. We cannot afford to neglect this area. We have to tackle climate change, and research stations are working on the resource side by growing nitrogen-fixing crops which do not use vital resources. Frankly, if we neglect areas of agricultural research such as these, we shall get absolutely nowhere. The noble Lord, Lord Plumb, made an excellent speech which needs to be examined carefully, given the wisdom of his experience over many years. Further, the noble Lord, Lord Grantchester, made a courageous speech from the Government Benches. He told his own Government exactly what the situation is, and I congratulate him on that.
	As an agriculturalist I could go on for another hour, but I do not have the time, as the whip is rightly indicating. This has been a good debate. I am sure the Minister will take on board what he has heard today and will act to improve the situation in what is a crucial industry: our agriculture.

Baroness Byford: My Lords, I am most grateful to my noble friend Lord Vinson for introducing this debate and to all noble Lords who have participated in it. The awful truth is that much of British agriculture is kept afloat only because of its assets in the form of land, which outweigh its debts in the form of bank loans and unpaid bills. The situation in England is far worse than anywhere else due to the appalling delays in the new single farm payment scheme. I am glad to note that the payments are starting to come through, but that does not take away from the fact that we should never have been in this state in the first place. I am sure the noble Lord, Lord Rooker, will acknowledge that. It is a disgraceful situation and I hope that he will ensure, with his usual robustness, that the outstanding payments are made as soon as possible.
	Many noble Lords have referred to the noble Lord, Lord Bach. The noble Lord was unfortunate to hold this ministerial position at the wrong time. He inherited a system with which he had had nothing to do. As we took Bills through the House he was always courteous and ensured that all noble Lords were given access to the Bill team, for which I am grateful.
	The latest figures on single farm payments show that 58,700 full payments have been made, along with 31,000 partial payments. This means that 85.8 per cent of the total expected payments have been settled, but some 5,000 claimants with claims of over £1,000 each have still not received any money. I hope that the Minister will be able to update the House on the position. While addressing the single farm payment scheme, can he tell us whether the Government will consider extending the deadline beyond the end of May for the 2006 applications? Let us get everything correct within the Rural Payments Agency rather than insisting that farmers apply early. I understand that penalties will not be imposed, but actually they are not the answer. As other noble Lords have pointed out, the system is complex and needs sorting. At this point I should remind the House of my family farming interests.
	Several noble Lords referred to the problems faced by hill farmers, an issue I shall return to straightaway. In its briefing the NFU states that it believes that,
	"a transition period of two years (2007/8) must be implemented whereby the current HFA scheme is continued, as we are not confident that the current systems in place would be able to meet the proposed deadlines. A new scheme would have to be set up by 1 Jan 2007. In our view the evidence is clear that it is simply not achievable for RPA to draw up a scheme, have it approved by EU, and then ask farmers to apply within that timeframe".
	Again, I would be glad if the Minister would comment on that.
	Perhaps I may turn now to the many excellent contributions that have been made today and pick up on the question of food security and self-sufficiency. I am often rubbished and told that we do not need to be self-sufficient—that it does not matter—but in an uncertain world where, unfortunately, climate change often means that the harvests of some countries totally fail, it is something to which we should cast our minds. With the change to the single farm payment, there is a likelihood that farmers may well move from producing wheat and feed to producing energy crops and diversifying into forestry. This could be reflected in the amount of food we produce, which may well continue to fall.
	I turn now to British food production in more general terms. Many aspects of the current position give me cause for concern. Chief among these is a realisation of the number of miles that our food travels from farm to fork. Even our daily bread has to be transported many miles to the shelf from which we take it. In the old days, the main street of any British town used to have at least two bakers, two butchers, a greengrocer and, perhaps, a grocer. Now, in some places, they are lucky if they have a convenience store or a corner shop.
	The noble Lord, Lord Tomlinson, referred to the globalised market. We know that that is where we have to compete, but I believe that we should compete in an even-handed way and it is up to the Government to ensure that that is possible.
	Within this tale of closures to which my noble friend the Duke of Montrose referred, abattoirs have been legislated almost out of existence, so most of the butchers' shops they supplied have gone too. The latest EU ruling on beef means that any meat over two years old has to be sold off the bone. There is no great trouble with that, but the bones the butcher removes have to be stained, kept in a separate store and removed from premises in dedicated transport. The butchers could easily return it to the abattoirs, which have all the facilities necessary for marking and destroying, but the rules forbid it. I have been told that the cost to the butcher of the new method will be about 40p per kilo of meat sold. Surely this is ridiculous.
	Let me move to one or two issues which other noble Lords have referred to and perhaps bring in some new ones. The noble Lord, Lord Plumb, touched on disease and its spread. He gave a figure of some £573 million, which the Government pay towards control of various diseases including TB, scrapie and BSE. I know that the Government have instigated a partnership to consider the sharing of responsibility for the costs of animal diseases and I would be grateful if the Minister could comment on that. Although it is fairly new and getting established, it needs to be clear where the responsibilities lie and how the industry is expected to pay towards some of the costs.
	The noble Lord, Lord Grantchester, and others have referred to the continuing cost of bovine TB, which is at this stage out of control, with more than 3,500 herds being reported on tests for the first time last year. If the Minister could tell the House when the Government will have a response to the ongoing comprehensive review, that would be enormously helpful. Perhaps he could also comment on the zero-based review which Defra is undertaking at this moment.
	We all want to see the production of healthy, good food. I should like it to be as locally grown and marketed as possible. I am not saying that there should not be international trade—please do not think that I am—but when the noble Lord, Lord Tomlinson, referred to it, I do not think he built into the equation the pollution caused by the food miles travelled and the pollution from air miles. That does not come into the equation but I believe it should.
	I was grateful for the contribution of the noble Lord, Lord Young of Norwood Green, and for his reference to the gangmasters. I prayed against the statutory instrument two days ago but only to raise awareness of it and the need to get the legislation enacted as quickly as possible. I think the delay has been unfortunate.
	The noble Lord, Lord Corbett of Castle Vale, should look to my previous Question on the Order Paper in relation to affordable housing. I am trying to get a response to it as quickly as possible. It is an issue on which I speak on a regular basis in this House. The ability to live and work—and to continue to work—in their own locality is a big problem for many.
	My noble friend Lord Selborne referred, as others did, to science and research. Everything that we do should be based on good science and research knowledge, with the Government making their judgments on that. If we keep cutting back on research establishments, we run a real risk of losing knowledge and skills.
	In thinking about where we can go in the future, I have tried to say, "We are where we are". It is not a happy situation; incomes are, on average, £12,500. For long-term investment, that is not good. I have tried to say where we think we can go. My noble friend Lord Caithness and others spoke about the need to minimise regulation. We all know that we need regulation, but please can it be as proportionate and minimal as possible? We should not have any more regulation than other countries against which we have to compete and which are allowed to get away with less.
	I believe that the farming industry has a great role to play in the future of our country, not just in the production of food and energy, but for the life it offers people. Our tourist industry is based on the success of farming. Healthy living and activities are based on people getting out and enjoying the countryside.
	I have two more things to say to the Minister. First, I would like to highlight the concerns expressed by farmers about the cross-compliance rules being introduced with regard to the single farm scheme. Some are quite worried that this will have a regressive impact on the way in which they farm, and some may well come out of the scheme. Secondly, my noble friend Lord Caithness said that he wanted the Government behind farmers. I would rather have the Government alongside farmers, giving them the lead and showing them where they think the farming community can play a worthwhile role in the future.

Lord Rooker: My Lords, I have found the debate fascinating. I really appreciate the tributes that have been paid to the work of my noble friend Lord Bach. They have been unanimous, which is not without significance. I saw him early this morning and will make sure that these comments are drawn to his attention.
	I welcome the debate. Before the announcement nine days ago, I was in Northern Ireland. Now I have the chance not only to speak, which I appreciate is important, but to listen. As I have said before, we would not get this debate in the other place. It has formed a checklist for Ministers and I will make sure that it is gone through with a fine-tooth comb. I have been handed lots of comments about what colleagues have said this afternoon; there is no way, in the time available, that I can remotely attempt to do them justice. I want to refer to what each person has said, but dissecting Hansard will provide a checklist for action for Ministers in Defra and in other parts of the Government. I will make sure that it is done that way.
	I am also grateful for the personal welcome I have received. As I said to the massed ranks of Defra this morning in Westminster—some 300 or 400 people—I will have to stop saying "I'm back" because it is not MAFF, it is Defra. As I let slip the other morning, it will always be MAFF as far as I am concerned.
	I have been a city dweller for most of my life. That point was raised when I was appointed to MAFF in 1997. At that point, the brief was about safe food. My constituents wanted safe food, just like everybody else did, and farmers wanted to produce it. But the point is that I do not see the countryside as a chocolate box lid. I want to make that absolutely clear. I never have done. In fact, I have the proof in one of my old files that I dug out. In 1990, for a brief period I was on the Back Benches so that I could serve on a Select Committee—the Public Accounts Committee. I also decided at that point that I would start to have a look at a few things that I had never done before, because I had been in the other place a long time by then. I draw noble Lords' attention to the Adjournment Debate on rural communities on 5 April 1990 led by the honourable Member for Birmingham, Perry Bar. That was on the Order Paper.
	I was stopped in the corridor of the other place a few days before by colleagues and they said, "Hey! What right have you got to debate rural communities? That's our turf". I said, "I don't think you're doing it well enough". I spent some time when I was on the Back Benches visiting rural communities and farms. I remember being in East Anglia in particular and other areas, and taking advice from the experts on land management at the NFU. I prepared that debate, which I then took through my party. The point is that I know what is meant by the rural way of life for rural dwellers and those who work in the rural community. But as my noble friend behind me said, 25 per cent of the population live in designated rural areas even though they are not necessarily involved in rural activities.
	I have one interest to declare: when I was at MAFF I actually joined the Soil Association, which was symbolic in a way. It is still there and I see no contradiction. In fact, I was able to argue for GM foods on a television programme. I said that there was less pesticide on them. I am not arguing that today, but the fact is that that is one interest I have to declare.
	I need to get another question off my chest. What is my top priority? The RPA and single payment is the answer. There are many priorities for new Ministers, but there is only one top priority. After the questions that I had last week, I was back from Northern Ireland and I headed off to Reading to the headquarters of the RPA on Friday afternoon. I could not have gone any quicker. I have not solved all the problems, but it was important that I went there. I apologise on behalf of the Government for the deep distress that has been caused by the constant promises given in good faith for the money that never arrived. But as people now know, a little more than 85 per cent of the money has been paid. It is already in bank accounts, not just cheques in the post. However, I again apologise for the distress that has been caused.
	That is a top priority. I will do everything that I can in working with officials, but I will also be taking advice from all quarters. There will be no no-go areas as far as I am concerned. I am interested in the past because you have to learn from it, but in terms of the future, 2006 has already started. I understand that and the pressures on farmers.
	Before I comment on colleagues' contributions, I should say that we have changed the date from 15 to 31 May and we genuinely want all the forms in by 31 May. We have received 70,000-plus. There will be no penalties up to 31 May, but I desperately implore farmers to get the forms in. We discussed this with leaders of the tenant farmers, the country landowners and the NFU last Wednesday afternoon along with the Secretary of State and we said that we desperately needed their help to get their members to get their forms in. There are difficulties with the forms, as we have heard from noble Lords. I accept that, but we want all the forms in if we possibly can. That is the only way that we can begin to assess how we are going to move forward.
	We still have to deal with some issues from 2005. By the way, there is no attempt to hold back the 20 per cent. Our intention is to pay that. Indeed, we have already started paying some of the 20 per cent payments for the top-up. I might also add, because I will never have time to deal with everything, that we have already started paying some of the 5,000 hill farmers who have applications above €1,000. There has been a difficulty there, particularly for hill farmers who could not get the money until the single farm payment was paid, but we have started to make inroads—I saw figures yesterday—into that 5,000.
	There are the 20,000-odd where the claims are less than €1,000; that is, £600. They have to be paid, but the priority has to be those who need the money as part of their main income. No one is going to tell me that €1,000 is a fundamental part of an income. But they will be paid. We will work as best we can to the dates that have been set out. We are having this assessed and reviewed daily. There is a hands-on approach from the Secretary of State and me, and I will report back to the House regularly.
	I really appreciate this debate introduced by the noble Lord, Lord Vinson. It has been a bonus for a new Minister to have the opportunity to listen to widespread opinions. His was an incredibly thoughtful speech, most of which I agreed with. I am not saying that there was any point I disagreed with, but that I understood and agreed with most of his points.
	The fact is that the landscape is man-made, and we have to pay for it. If people in this country want the landscape of the countryside, they have to pay for it, because it is man-made—it is not nature. Making the connection between food production and the landscape, as other noble Lords have said, is a key element of what we are trying to communicate. There is no question that so far we could have made a better job of that.
	In his early comments the noble Lord made a key point, which others have made, including my noble friend Lord Corbett and the noble Lord, Lord Livsey, about co-operative marketing. We are no good at it. We have to get the farmers and producers to get a bigger grip on parts of the food chain. They will only do that by co-operation. It cannot be done working as individuals. Maybe it is just something in the British psyche. The Germans, the French, the Italians and, in certain areas, the Spanish have more producer control over the food chain, which has to be a good thing. That is not an attack on the supermarkets, but if the producer is only getting back 8p in the pound, something is clearly wrong. Producers feel beleaguered, particularly with regard to milk. I understand that, and I will do what I can to push that forward, but it has to be self-made, as someone said. You cannot force people to co-operate, just like you cannot force them to be good neighbours.
	My noble friend Lord Christopher and others raised the issue of food security. I am as concerned about food security as I am about energy security. There are some real issues relating to the issue. There is not time to get into the detail, and I do not want to quote lots of figures, but the UK is 73 per cent sufficient in the food we can produce in the country. We are 60 per cent sufficient in all food, as there are some foods we cannot produce. Food security is important, particularly because, as I think the noble Countess mentioned, if there is a problem with oil and transport there is difficulty picking up imported food.
	My noble friend Lord Christopher was the first person in the debate to mention bovine TB. We will come back as quickly as we can as a result of the consultation, as I said in answer to the Question the other day. It is a difficult issue. I have reviewed some of my files, because I received Professor Krebs's report and set up the Bourne inquiry of the independent scientific group. I have seen quotes from scientists in 1998 saying, "In five years"—or seven, because of foot and mouth—"we will have the definitive answer about TB, what it is caused by and how much it will cost". But we haven't, have we? And yet I have to go with the science. My department is more reliant on science than most others in government. I am catching up with issues and I am finding that the science at the moment is not as clear-cut as we were promised when we set up the inquiry.
	The noble Earl, Lord Erroll, gave me a quote that I shall use for ever when he referred to us as, "we peasants". Four Earls, a Countess and a Duke, and the Earl says, "we peasants". But I will be asking questions about the issues he raised about the maps and so on.
	My noble friend Lord Tomlinson referred to the reform agenda. There is such an agenda. It is true: farmers want reform. Some 5 per cent of farmers are producing some 50 per cent of the output, so there is a great dislocation between the sizes and output.
	I have visited small average farms in Northern Ireland run by family partnerships with the farms being passed on to the son. Those farmers used modern technology. They did not use glitzy hi-tech but had good returns; in other words, they made a go of their farms. The key was that they embraced reform.
	The noble Earl, Lord Peel, asked about modulation. There are serious issues in that regard which I encountered when dealing with agriculture in Northern Ireland. I dealt with modulation in connection with rural development programmes. Discussions and decisions on that are ongoing. The noble Earl mentioned the landscape and cheap meat imports from animals that were subjected to poor welfare standards. That has been a constant complaint and I suspect that there is more than a grain of truth in it. We must tackle it as our producers will be damaged if we do not ensure that everyone else follows the rules. It is not a free for all; it is a regulated market. If it were a free for all, we would all go down because there is no way that we can compete with those abroad who are cutting corners. The noble Earl also mentioned the hill farm allowance. I take the point that he made about the payment and about the system continuing until the new one is established.
	I say to the noble Lord, Lord Beaumont of Whitley, that the British Government have no plans to leave the European Union, which is the point that he made. I understand where he is coming from. My noble friend Lord Corbett asserted that the healthy independence of farmers had stopped co-operation. He picked that up from the years he spent as a journalist on Farmer's Weekly, as he said. My noble friend gave us the example of a small but successful pig producer. That farmer is making a go of it. I refer to the issue of whether the vast majority of the population know where their food comes from. The degree of ignorance is enormous in that regard. We need to devote more attention to that issue in as positive a manner as possible. My noble friend also laboured the need for housing for the large percentage of families who live in rural areas so that they are not driven away. I fully accept the usefulness of the report that was published this week.
	I shall need a separate brief for the speech made by the noble Earl, Lord Selborne. I give the commitment that I shall seek to meet his challenge. His words struck a chord with regard to the work that I undertook at the former MAFF. There was a fairly large budget for the science base. In the next couple of weeks I shall be visiting two of the laboratories. I refer to the usefulness of the research budget and the ways that things have changed since the days of Rothschild. However, as I say, I need a separate brief to respond to his speech but I shall meet his challenge with regard to the science councils.
	I am extremely grateful for the warm welcome given by the noble Countess, Lady Mar. She does not hold back at all even though I think that she likes me. The noble Countess made it absolutely clear that there is a problem with farming and that it has an uneconomic, unstable base. Yesterday she gave me a letter, which I have read and submitted to the department, on the stress caused to families who have an outbreak of bovine TB in their herds. In the past I have visited farms during outbreaks and have witnessed the stress that that caused to farmers. As I said the other day when I answered a question on this point, no one ever approached me about sick cattle except farmers. Plenty of people moaned about badgers but we do not obtain food from badgers, although I am told that in the 1920s badger ham was considered a delicacy. However, I should think that it would be illegal today. If cattle become ill, there is a real problem. People and families who work on the farms have physical contact with those cattle every day and suffer enormous distress if the cattle become ill. I understand that and have seen it at first hand in Gloucestershire and on a farm that I visited in Staffordshire where there was a very severe outbreak. Therefore, I fully understand the situation. I will try to make more such visits but that must not get in the way of the top priority of dealing with the RPA. That is more important than visiting farms. I am not immune to that but there is a serious issue here.
	The noble Countess also referred to isolation among farmers. We have made more money available to tackle rural stress but I accept that that does not solve the problem. We have to stop the stress occurring in the first place. I can remember being told about people putting on their Sunday best queuing up at MAFF's regional offices for the IACS day, and it was a question of meeting people who you would not normally see and of social intercourse and talking to other people. That has gone; the markets have gone in some ways, and they were the gel that held the community together. That is not there now, and that means that people are more isolated, under more pressure, with more change, and that can cause massive illness, which can lead to tragedies in some cases.
	On the beef ban, I looked up my notes yesterday, and I thought, "Hang on, there is something funny here". After nine years as a Minister, I only made my first visit to Brussels on 3 May to feed Northern Irish beef to the assembled crowds, including some customers who were going to buy it. That is a big success for the industry, and it is a tribute to officials, farmers and the whole meat industry to get the ban lifted. It is true that it has taken 10 years. Our beef has been more checked over and more tested by the Euro vets than anyone else's beef. We cannot use food safety as a marketing issue because that is not on, but we can market our beef as more checked and better tested than anyone else's in Europe, because so many hurdles were put up before us over the years, and we passed every one of them. The corollary to that is when the Euro vets come to check us, as they will do later in the year, we cannot afford any negative reports. I accept that some people say that there is the 24-month rule and the other rules. I have to look into the deboning and the transport of the bones back to the abattoirs. We cannot afford to have anyone saying, "The Brits are cutting corners and they are taking risks with food safety". We have to get through that check and test later in the year. I hope that we can rebuild our industry, which was worth £600 million a year for a couple of years before the ban was imposed.
	My noble friend Lord Young paid tribute to the work on the gangmasters legislation, and it is a very successful operation. We had a good debate on that the other day. The noble Lord, Lord Plumb, gave me the benefit of his time 18 months ago for a day in the country looking at various aspects, for which I am incredibly grateful. He made the point regarding TB and the single payments. The noble Lord, Lord Marlesford, made a trenchant speech. He does not like my department; I accept that and I will do my best to make him love everyone who works there, including the Permanent Secretary, who is always available and is on the job 168 hours a week like Ministers. We do not measure the way that we do it by clocking on and off. Those days are gone; you are available all day every day. I will get him to learn to love Defra before I finish.
	The noble Earl, Lord Caithness, raised the issue of the tallow decision and the burning in the renderers. I accept that he complains that it took too long to get that decision. There is an issue to be raised there, and I fully accept the legitimacy of what he said. The noble Lord, Lord Livsey, raised the issue of producers, and I have touched on that. I cannot do justice to what the noble Baroness, Lady Byford, said, and I will have to come back on some of the points. I will write on the issues that I have not covered. I cannot change that date of 31 May. I cannot impress enough that farmers must get those forms back to us. She raised the question of the abattoirs, and I will be looking at that because it is an issue for the Food Standards Agency in some ways. I do not want to preside over the demise of the small abattoirs; I was trying to stop that when I was there before. It is the responsibility of the Meat Hygiene Service, and farmers and food are now my responsibility.
	I make the same offer that I have made before, and this is not done in a negative way. If anyone can find a regulation that we are operating that we do not need to operate, or somewhere we have gone way beyond the rules in a way that we do not need to, tell me what it is and I will get it changed. There is no reason why we should operate more than an inch beyond what we need to do, given all the pressures that are on us. I have said this before to agriculture and farmers, and I have also said it to the fishing community. It is genuinely meant, but people do not come forward with specifics. I make the offer genuinely; I can take a fresh look and a fresh start. If we can find anywhere we are over-regulating way beyond what we are required to do by law, we should not be. We are not in the business of gold-plating. We need to get gold in food production for the whole of the food chain—for the producers, the retailers and everyone working in it. They deserve the gold, not us putting gold into regulations.

Lord Vinson: My Lords, the Minister's closing remarks have been exactly what the whole House wanted to hear. It was a draught of commonsense. It typifies what this profound debate has produced—people are not interested in who is right, but what is right. The various party spokesmen summed up much better than I could, and the debate showed the depth and breadth of experience in this House. On behalf of this side, I thank all noble Lords who have taken part and reiterate to the Minister that if this is the way that he has started, by God, he has set a wonderful precedent to continue. Thank you. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

EU: Effective Regulation (EUC Report)

Lord Grenfell: rose to move, That this House takes note of the Report of the European Union Committee on Ensuring Effective Regulation in the EU (9th Report, HL Paper 33).

Lord Grenfell: My Lords, this debate on the dangers of over-regulation follows on nicely from the previous one, so it with great pleasure that I rise to introduce two reports. I begin by thanking the members of the Select Committee for the hard work that they put into this inquiry and our resulting report on how to make European Union regulation less burdensome. I am extremely grateful also to our committee Clerk, Simon Burton, and to the committee's second Clerk, Sarah Price, who drafted an excellent report.
	I am pleased to see non-members of the Select Committee on the speakers list. Their interest in the subject is greatly appreciated and I particularly look forward to hearing the noble Lord, Lord Filkin, the chairman of the Merits of Statutory Instruments Committee, in the debate. The fact that, apart from me, members of the Select Committee are not on the list may be due to their exhaustion after their efforts in the debate earlier today on the burning issue of the so-called European constitution.
	Our main report was published almost nine months ago. However, our debate on it is timely in light of the follow-up report, which is also before the House, published a month ago today. That second report updated the House on the Government's response to the original report and on developments in the area during the UK presidency. More than that, the Commission is now in the throes of developing some encouraging initiatives in the field of better regulation which respond in many respects to the actions called for in our original report. I shall come to those later in my remarks.
	Our main report considered the principles of good regulation, looking in detail at the progress that the EU institutions were making as regards creating a better regulatory environment. In March 2005 the Commission, on the initiative of Günter Verheugen, the industry and enterprise commissioner, issued a communication entitled Better Regulation for Growth and Jobs in the European Union. It proposed three key action lines: promoting better regulation tools, working more closely with member states, and reinforcing the constructive dialogue between regulators and stakeholders.
	This overdue recognition of the huge importance of moving now to improve regulation was warmly welcomed. Much European Union regulation is broadly accepted as an essential part of the single market, but, in recent years, an increasing number of EU regulatory instruments have been seen by many as either unnecessary or as an undesirable burden on industry. Such regulation has undoubtedly damaged Europe's reputation for good law making—hence, the increasing talk of the need for "better'" regulation.
	The European Commission defines better regulation as,
	"a policy which aims to ensure that (existing and future) European Union legislation is as concise and straightforward as its subject matter permits and is as light as is commensurate with the proper protection of the various public interests at stake and the burden it imposes on economic operators".
	The Commission's definition therefore properly highlights the importance of light, focused regulation.
	The UK's Better Regulation Task Force, which was ably chaired by Sir David Arculus, who gave evidence to us, set out five principles of good regulation that aim to show on what grounds "light, focused" regulation can be constructed. Those principles are proportionality, accountability, consistency, transparency and targeting. The principles suggest that regulators should intervene only where necessary and should work transparently and keep regulations simple and user-friendly.
	The EU Commission works to principles very similar to those outlined by the Better Regulation Task Force. These principles stem from the discussions of the Mandelkern Group of member states' experts on better regulation, which was set up in November 2000 and was tasked with developing a coherent strategy to improve the European regulatory environment.
	There was broad agreement among all our witnesses that the principles of good regulation to which the Commission works are basically sound. Problems arise when those principles are not implemented effectively. Regulatory reform is important for two reasons: first, to stimulate economic growth and competitiveness, and, secondly, to improve the EU's image.
	Better regulation will, it is argued, help to make the EU a more attractive place in which to invest and work. The joint statement issued in December 2004 by the Irish, Dutch, Luxembourg, British, Austrian and Finnish presidencies stated:
	"As we seek to refocus the Lisbon agenda . . . so too must we develop clear objectives and goals that enable us to take a comprehensive view of how regulation is affecting business and competitiveness across Europe and bring to an end the increase in administrative burdens in our economies associated with EU regulation".
	We also heard from some witnesses, Commissioner Verheugen naturally included, who argued that improving regulation in Europe would help to restore citizens' trust in the European Union. Our report made clear our belief that involving Europe's stakeholders in better regulation initiatives could help to improve the Union's image and foster better understanding of its institutions and working practices.
	The March 2005 Commission communication discussed three main practical strategies for improving the regulatory environment. These were: first, improving impact assessment; secondly, simplification; and, thirdly, improving consultation methods. A proper impact assessment helps to pinpoint the benefits and drawbacks of a proposal and helps to ensure that the regulation proposed is really necessary and not overly burdensome.
	The Commission set out its commitment to integrated impact assessments in the communication, saying that the policy was,
	"designed to allow policy makers to make choices on the basis of careful analysis of the potential economic, social and environmental impacts of new legislation".
	Our committee welcomed the Commission's commitment to impact assessment but called on it to make it mandatory for all key proposals to be accompanied by an assessment, whether initiated by the Commission or member states, to ensure that all possible policy options have been assessed ex-ante.
	The committee also welcomed the introduction of the Commission's revised impact assessment guidelines, issued in June 2005, which set out the procedural rules for, and key analytical steps in, impact assessment. We hope that these guidelines will help to ensure that the process is taken seriously and does not just descend into a "tick the box" exercise. Our report also stressed the importance of officials considering all options when completing an impact assessment, including, most crucially, the "do nothing" option and achieving the aim of the legislation through non-legislative means.
	If impact assessments are to be effective, they must be undertaken at the correct time. Our report recommends that they be undertaken at an early stage and revised as proposals proceed through the EU law-making process. This recommendation reflected the thinking of Sir David Arculus, who told us that impact assessments should indeed be done right through the process. In addition, we recommended that when, in the course of debate, the European Parliament and Council depart substantially from a Commission proposal, they should produce a revised impact assessment. Further, if assessments are to inform the full process, ex-post assessment is important. Important lessons could be learnt and ex-post assessment could be used to help to examine the effectiveness of EU legislation.
	The second of the Commission's practical strategies is simplification. In the October 2005 communication, the Commission pledged to screen proposals that were pending before the Council or Parliament with regard to their general relevance and their impact on competitiveness. The Commission could then decide whether to modify, replace or even withdraw such proposals. In addition, the Commission continues to implement its rolling programme for simplifying the acquis. Commissioner Verheugen told us that this was being undertaken sector by sector and that the results would be presented sector by sector as the work progresses. Our report welcomed this approach.
	The last of the Commission's practical strategies was consultation. Effective consultation should provide both an opportunity for officials to explain Commission proposals and an opportunity for interested parties to shape them. The revised impact assessment guidelines include a list of the Commission's general principles for consultation. The real danger with consultation is stakeholder fatigue. Businesses and other stakeholders get tired of engaging in consultation exercises when they do not see their comments being taken on board. To combat such fatigue, our report recommended that consultation should be much better targeted and conducted as a meaningful and genuinely interested process.
	Our inquiry considered the case to be made for the creation of a new European body to oversee and improve regulation and concluded that, at present, there is absolutely no need for such a body. Indeed, we felt that such a body would only add another layer of bureaucracy to the EU's regulatory environment and would entail an unnecessary duplication of resources. One of the central recommendations of our report concerned our recognition that action at EU level will not be enough to improve the regulatory environment. We strongly recommended that member states tackle regulatory problems arising at national level and lend their support to the Commission for a better regulation agenda.
	So what progress has been made, and where do we go from here? The Government's response to our first report agreed with one of the committee's main conclusions; namely, that it is important that the various better regulation initiatives are implemented efficiently and assessed fully. In their response, the Government also took the opportunity to update the committee on the main developments on better regulation during the UK presidency, and outline further developments expected during the forthcoming year—to which the Minister will no doubt refer this evening.
	The UK presidency sought to reinforce progress made on impact assessment by ensuring that impact assessments were discussed and used as points of reference during negotiations on specific dossiers, such as the chemicals regulation and the capital requirements directive. In November 2005, the Commission announced plans for a methodology to measure the administrative costs of new regulatory proposals. In time, it is hoped that the methodology could be incorporated, where appropriate, into impact assessments. That same month, the EU institutions agreed an inter-institutional common approach to impact assessments which sets out how the institutions are expected to co-operate with each other. This is a very welcome step forward.
	As regards simplification, in September 2005 the Commission announced its intention to withdraw 68 legislative proposals, deeming them to be either outdated or inconsistent with revised better regulation standards. The following month, the Commission published a communication setting out a three-year rolling programme which aims to repeal, codify, recast or modify 222 basic legislative regimes, covering around 1,400 legal acts. We wish it well and hope it succeeds.
	The UK presidency then worked with colleagues in Austria and Finland to produce a joint discussion paper for the ECOFIN meeting in December 2005 entitled Advancing Better Regulation in Europe. The aim of the paper was to ensure systematic progress over the forthcoming months and years. Seven areas are identified in which further progress could be made: impact assessment—naturally—and simplification, tackling the administrative burden of EU legislation, risk-based enforcement, consultation, advancing alternatives to regulation, and international regulatory co-operation.
	The White Paper Prospects for the European Union in 2006, published by the Government last January, reiterates the joint presidencies' commitment to better regulation, stating that:
	"The Government expects progress to continue this year on better regulation, with the Commission delivering on their simplification programme and maintaining impetus in the follow-up work. Both the Austrian and Finnish EU presidencies are committed to maintaining the reform momentum based on a joint programme of work agreed under the UK Presidency".
	We therefore have good reason to believe that the better regulation agenda will retain the political momentum that has been building up behind it in 2006.
	A month ago, on behalf of your Lordships' House, I attended and spoke on better regulation at a conference in St Pölten, Austria, organised by the Austrian presidency and attended by government ministers, parliamentarians and EU officials. At that conference, Commissioner Verheugen announced a firm target—to cut the bureaucratic costs for European enterprises, especially small and medium-sized enterprises, by 25 per cent. I warmly welcome this commitment. Last Thursday, the German Chancellor, Angela Merkel, told the Bundestag that this target must be met.
	The previous day, Commissioner Verheugen had announced three new initiatives. The first was to set up in the Commission a standing committee of senior officials to monitor the quality of impact assessments drawn up by the Commission. Secondly, he said that he would table proposals to achieve the previously pledged 25 per cent cut in the burden placed on industry. Thirdly, he announced a speeding-up of the simplification programme and listed a number of now simplified proposals, including two of major importance—the review of the sixth VAT directive and the updating of the EU customs code.
	The Commissioner acknowledged that these initiatives were part of what was inevitably a long and difficult process of improving EU regulation. One wishes him well, but much will depend on the performance of the institutions: the Commission, the Council and the European Parliament. As our report insists, they must stand by the pledges they made in the Inter-Institutional Agreement on Better Law-Making.
	But action at European level will not be enough, as we emphasised in our report. While giving, we hope, full support to the Commission in its efforts to improve regulation, member states need at the same time to tackle problems arising at the national level. I believe that Her Majesty's Government well understand that. As to the work of your Lordships' Select Committee on this vital question, let me somewhat immodestly record our satisfaction that many of the measures that we called for nine months ago are now firmly on the European agenda. We can only hope that the momentum behind the current drive to improve Europe's regulatory environment will not be lost. I beg to move.
	Moved, That this House takes note of the report of the European Union Committee on Ensuring Better Regulation in the EU (9th Report, HL Paper 33).—(Lord Grenfell.)

Lord Filkin: My Lords, I am very glad to take part in this debate and, in doing so, to pay tribute to the EU Committee under the chairmanship of the noble Lord, Lord Grenfell. The committee does the House and public policy a great service.
	I should like to address two issues in what I hope will be a short address to the House. The first involves some reflections on policy-making at the EU level and the second relates to the evidence and experience of the House's Merits Committee about the importance of better regulation and better law-making in Europe.
	I will therefore say a few words about policy-making at the EU level. I say this not as a Europhobe but as someone who believes that Europe is in principle a force for good, as is our membership of it. However, that does not mean that one should not be at times a critical friend in trying to improve how it addresses its business.
	Governments generally tend to think too much that policies are achieved through law and regulation. It is the mindset of lawyers, officials and even some Ministers; it is certainly the mindset of Europe. We have seen that the generally great success of the single market has almost led to the building-up within the Commission of a mindset that the way to address policy issues is through the production of legislation, regulation and harmonisation. Sometimes that is the correct policy response and sometimes it is not. But the degree of policy reflection and differentiation in the Commission around that issue, in my limited experience, is weak.
	I was a Europe Minister for two departments and whenever I went to Brussels I had the pleasure and privilege of staying with the UKREP ambassador, Sir Nigel Sheinwald. Over dinner, we discussed these issues. Essentially, the issue is that, before Europe rushes to legislation, it has to get much better at doing the sort of proper policy analysis that any good government would do. That is about asking, "What is the nature of the problem? Are we clear about the nature of the problem and have we been able to quantify it and inform that by research? Have we thought creatively and widely about what may be effective solutions to the problem? Which of those solutions can best be addressed at the European level and to what extent, and which at the more domestic level? What is the mix of weight between the European level and the national level?" I do not think that the policy capacity of the Commission is good enough in that respect. It is much too easy for the various directorates of the Commission to rush to have a set of new legislative proposals, rather like over-eager domestic government departments wishing to get a lot of items into the Queen's Speech. That process leads to poor legislation and ineffective regulation.
	To give an illustration of that, when I was in the Home Office, we spent about four years trying to harmonise regulations about how asylum seekers should be handled. There might have been a humanitarian case for doing that, or maybe it should have been done at national or Europe level, but that was clearly irrelevant as a central goal to address the problem of illegal migration and asylum. Yet as Ministers and fonctionnaires, we occupied ourselves happily by looking at that issue, which was not proper policy analysis of the nature of the problem. That is part of this story and it is important the UK Government play a strong part in challenging the EU to get better at policy making rather than just rushing into legislation. Clearly, the EU scrutiny committee has great capacity in that respect.
	I shall move away from such weighty matters to the more domestic subject of the Merits Committee itself. As noble Lords know, the members of the committee work rather hard and we scrutinise thousands of regulations every year. It is great fun and we have given up the rest of life to do so. Part of that process leads us to identify issues that need attention from government and, potentially, supervision and guardianship by the EU scrutiny committee of this House. Our key message to the Government and the EU scrutiny committee is that it is essential that before Ministers sign up and make law—as one does when one is in Europe—they are clear about the policy objective and they have identified the nature of the problem and that regulation and law-making are necessary. Some regulations are necessary; I am not being Luddite and saying that no regulations are necessary.
	As part of that, it is crucial that there has been a proper identification of how the policy objectives—that one hopes have been clearly identified—are going to be delivered in practice so that one can see a realistic delivery chain and that the impacts on those who will be affected by the regulations have been identified. In our inquiry report and in a letter we wrote last year to the noble Lord, Lord Grenfell, and his committee, we said that before Ministers sign up to a law, they should have ensured that they have identified the consequences of that law for those who will be affected. Unfortunately, the only safe way of doing that is to ensure that one has involved in discussions of the process those who will be affected because even the best Ministers and the brightest civil servants will never spot the impacts or the consequences by themselves.
	The good news is that sometimes that is done. To really thrill the House, it can be seen in a regulation called the Boiler (Efficiency) (Amendment) Regulations. The DTI negotiated with the industry and, as a consequence, changed its negotiation objectives into Europe before it made the law. Well done the DTI! We have also seen it happen in the Office for Government Commerce with regard to the Public Contracts Regulations, which sound terribly dull but are massively important in scope. The OGC engaged with those who would have to do this in detail before it signed up to the regulations. Well done again!
	Our key message is that government has to do more of this. I am sorry to say that because it means more work for Ministers and civil servants, but unless it is done more often, we will not spot the lemons and we will not have tested properly that that is the most effective way of achieving what may be a good policy objective.
	I shall not weary the House with examples of what we have seen, but some of them are almost beyond belief. Somewhere in southern England, there is a fairly large warehouse full of forms that fishermen on any small boat that catches fish fill in saying they sold the fish to Fred Bloggs. We pressed officials: "What are you going to do with it?" They said: "Well, we haven't yet looked at it, but it is so we can estimate the amount of fish in the North Sea". Perhaps that was necessary, but it is hard to believe that that was the most effective way to achieve that understandable policy goal.
	So, sometimes we have to identify these mechanisms before we sign up to them. It is not just because you make better law; there is a more fundamental issue. If the UK Government make a law, and consequently a regulation, which we then find is a bit daft, it is conceivable that we can change that relatively straightforwardly. Governments will always say that it is not daft because that is the nature of governments of all parties, but, if the pressure gets too great they can, if necessary, withdraw the regulation or even, in more extreme cases, amend the primary Act. Amending European law is much more difficult. You used to have to persuade 14 others; you now have to persuade 24 others to do so. You have to get it right more often because it is harder to change it after the event.
	I will close with a little example of pipe organs. I have to declare lots of interests here. I am the chairman of the St Alban's Cathedral Music Trust, which is one of the joys of my life. It looks very much as though the organs are caught by a directive which was meant to have nothing to do with church organs. The Government have been a bit shy in admitting they are caught; but in practice we believe there is a very high risk that they are caught. We are now trying to identify how to get them out of this mess. That is a classic example of a completely unwitted consequence of a good objective biting on a bit of real life over here which nobody had spotted and nobody wanted to. The solution to that is to take much more care at the stage of making law to identify the consequences.
	Therefore, we have urged this on the Government in our inquiry report and we wait to see what they say. But, above all, we urge that the EU Committee looks at these issues and presses Ministers—I know the pain of having to come before the committee; I have done it more often than I would have wished—to say what is their policy objective. It should say, "Is this the best way of doing it? Have you identified the regulatory consequences? And please tell us about the consultation process you have done to ensure you have identified those consequences. Tell it to us clearly, and if they have not done it, I hope you will send them back to do it again".

Viscount Eccles: My Lords, it is a pleasure to follow the noble Lord, Lord Filkin, as a member under his chairmanship of the Merits of Statutory Instruments Committee. As the noble Lord told us, if the policy objectives of the regulation are not clear at an early stage in its preparation, any system of scrutiny becomes a problem.
	These two welcome reports concentrate their recommendations, as the noble Lord, Lord Grenfell, has told us, on the methodology employed—for example, in the assessment stages. They both benefit, as again he said, from the work of the Better Regulation Task Force. Earlier this afternoon my noble friend Lord Howell urged us to be practical rather than emotional about the European Union. I shall follow his advice—I hope.
	I will venture behind the mechanics of regulations to consider their politics. Regulations brokered by the Commission become, after discussion and compromise with the many interests involved, matters for political decision. As Commissioner Verheugen said in evidence:
	"At the end of the day it is always a question of political priorities".
	Briefly, the issues of political weight are competition within the single market, competitiveness in the global market, health and safety, consumer and employment protection and the environment. These are Europe's three pillars—economic, social and environmental. No wonder, then, that it is,
	"always a question of political priorities".
	Agreeing the right way forward within one issue—say, competitiveness—on its own and more so agreeing the right balance between any two issues—say, competition and employment protection—is certain to produce widely differing views. Most probably it has been the sluggish performance of some of the leading European economies that has brought competitiveness to the top of the regulatory agenda. There may also have been a growing realisation that if regulation is added to regulation, and if none is repealed, none is simplified, and none is brought into line with advancing scientific and technical knowledge, one day we will arrive back with state economic command and control or—the more likely alternative—with the regulatory system honoured in the breach by those relying on the spirit of the Napoleonic code rather than on the interpretation of common law; a most uncomfortable position for the United Kingdom.
	The noble Lord, Lord Grenfell, referred to the Commission's seven principles. He was not quite brave enough to read them out, so I will for completeness. They are necessity, proportionality, subsidiarity, transparency, accountability, accessibility and simplicity. And how can one object to those? The issue is that they need to be applied to existing regulations, and with even greater focus, provided of course that the Commission, the Council and the European Parliament agree on how they need to be applied. The committee did not find much evidence of such agreement. Nor is it helpful to claim that new regulations could ever be matters of last resort. There is too strong a determination to reconcile the conflicts between and within the political issues at stake, and often quite rightly so. Indeed, to proclaim last resort is to duck the politics of Europe altogether, because surely everyone expects there to be more regulation, and no one expects, for better or for worse, that there will be less regulation in total in, say, five years. The committee did not expect so; nor did any of its witnesses. Nor does anyone put their faith in codes of practice and self-regulation. As the commissioner put it, rather delightfully:
	"I always say, 'This is a matter for self-regulation,' and industries normally say, 'Self-regulation is a little bit complicated, we cannot control it, we cannot guarantee it.' But the same people who are criticising the European institutions for over-regulation during their Sunday meetings will show up on the Monday morning . . . and will say, 'We need to bring in other legislation'".
	In contrast, Which? says in its evidence that the Commission experts need to avoid focusing,
	"on those regulations which industry lobbies regard as inconvenient while leaving in place those that enable them to continue protectionist policies".
	Similar evidence is available when considering consumer or employment protection, which is to be expected, because, as the Commission says, those who lobby are not always "entirely objective". Thus, we need political leadership that determines political direction and political priorities. To judge from these two reports and the Government's response before the House today, this is pretty difficult to find. There is talk of culture change and of difficult programmes of simplification, but there is no attempt to analyse the differences that arise between regulatory pragmatists and those who believe that regulation is one way in which to bring Europe ever closer together. No attempt is made, for example, to define or even to describe how subsidiarity—one of the Commission's seven principles—could be applied to regulation. Some witnesses want more European regulation and less national regulation. Others want the reverse. What is the Government's position?
	Some hint of the confusion is provided by the table in Appendix 3, entitled, "Overview of measures in the area of Better Regulation and impact assessment". Only three countries scored 10 out of 11 for their programmes on regulatory issues; the average over 25 member states is 5.5, and three countries score nil.
	Finally, the prevailing impression is that regulation is to be left to officials. The issues within and between the Commission, Council and European Parliament can be recognised only by compromise brokered by officials. Settling issues between member states can be done only by protracted negotiations because Europe does not have a sense of political direction that would fulfil Commissioner Verheugen's final sentence of regulatory evidence. He said:
	"It is a process that needs permanent political guidance and political control, otherwise the result will be not less bureaucracy but more".
	Unless things have greatly changed over the past year, one can have only a certain amount of sympathy for the bureaucrats as they struggle with a lack of political leadership. But I may be too pessimistic and, no doubt, the Minister will put me right if I am.

The Earl of Erroll: My Lords, I thank the noble Lord, Lord Grenfell, for the opportunity to say a few words on regulation. The title "better regulation" is an interesting one, because can regulations actually be better? However, I liked the fact that the reports referred to principles that they tried to adhere to and drive towards, because we need to bring principles rather than just rules back into how we think about our legislation and the framework into which we get businesses and individuals to operate.
	On those principles, starting with proportionality, do regulatory remedies really work? Someone once said to me, "Regulations are for your enemies". I have watched that happen. Large departments of state and large businesses are both large bureaucracies that get on together, so it is nice for a large business to be able to produce regulations that ensure that the smaller competition cannot catch up.
	With regard to accountability and scrutiny, parliamentary procedures provide a path to get almost any authoritarian measure onto the list of statutory instruments. In the end, we cannot change things in statutory instruments; there is a lot of talk about the problems of SIs and the fact that once you have handed over the power to the Minister to make the regulations Parliament is no longer in the loop. It can debate them, but that is all.
	With regard to consistency, how do you ensure that these regulations do not conflict in this complex network that is life? Regulations really meet only at the point when they reach the citizen or the business; those people understand all the things that come to have an impact on them from different places. I referred to that point in the previous debate, about farming. The different departments that have a single issue to deal with do not understand the cumulative impact of the total picture on individuals or businesses. Who else is to know?
	I return to the question of principles. I think we should do things by principles and approve of the concept. If you go to the Queen's Robing Room, you can see how Britain ran an Empire on which the sun never set with only a few thousand civil servants, whereas now we have millions of civil servants trying to control and regulate the existence of this country alone—and a few other people outside, but not very many. In the frescos at the top of the Robing Room walls you can see illustrated the social principles to which you should adhere, such as hospitality, religion, courtesy and so on. Then underneath them you have the Arthurian legend and all the public principles of honesty, justice, virtue, loyalty and the other public things you should adhere to. In those days, you reinforced that by rewarding and doing business with and giving titles to the people who did very well, adhered to those principles and were the nodes in the network. You would take that loose association of the network of human life with you in the direction that you wanted society to move, and you did not do business with people who you did not want to do business with. It did not matter about their CV and whether they could tick the right boxes—it was just bad luck. In that way, society moved in the direction that you wanted, by adhering to principles.
	The trouble with regulations is that they will affect that complex network in unpredictable ways. The network is not deterministic. A network cannot be controlled using simple system rules. It will reform around those rules in an unpredictable way: the law of unintended consequences. The second thing that happens is that the bad chap can find his way through the rules and come out the other end with total impunity. There is nothing that you can do about it. That is why I like the principles behind this.
	There are several areas for further progress. One good point is risk-based enforcement. Everyone says that we must make the world safer. The Daily Mail says, "Something must be done about it". We end up making lots of rules, but we do not look at the overall risk. When you stop a tube escalator due to the risk of a crack appearing because it happened elsewhere, have you measured the number of people who will have heart attacks and strokes from staggering up and down the escalator with full suitcases or who will suffer stress and get stress-related cancer because they could not make their aeroplane or whatever at the other end? One forgets that it is not as simple as saying, "We are making it safer". In many cases, the danger and the risk are just being transferred.
	As regards SMEs, rigid rules can easily restrict the ability to manoeuvre. I was interested by the Government's response in paragraph 116 on page 16, which states:
	"As part of its review of implementation of the impact assessment guidelines, the Government will encourage the Commission to consider whether the current requirements in relation to SMEs are fully effective and to take additional action if it proves necessary".
	It depends which side of the fence you are looking at. Does "fully effective" mean that the rules are not biting hard enough and need to be tightened up, and that enforcement measures need to be made better? It does not suggest that the rules should be relaxed. It is a very ambiguous statement. I wonder what is meant by it.
	Ultimately, if SMEs are not encouraged to grow, there will be no one to pay pensions. Big companies merge, rationalise and downsize. The growth of the future comes from SMEs. They grow bigger and eventually get absorbed into big countries. That is your future wealth and the people who will pay your pensions. If you work for the Government, you are not paying your own pension because you are not a wealth creator. You are only there, I hope, to enable other people to go out and create the wealth that will support you.
	I was interested in the European dimension of the level playing field between us and Europe. We treat regulations very differently. It is well known that the Continent has a slightly more cavalier attitude towards many regulations. A friend said to me the other day that it is because they are used to ignoring the papal bulls that came out from the Catholic Church, because they have lived in Catholic countries for many centuries. They just ignore the regulations that they know ordinary human beings in their frail way cannot comply with. Unfortunately, in the UK and the Protestant community, when we got the Factories Act we built up a system of enforcement that would make sure that people complied with the rules. So we also made sure that the rules were reasonable. That applied until quite recently. But the rules are getting out of control and we still enforce rigidly. That is quite dangerous.
	Sometimes the sideways consequences are quite unexpected. For example, under anti-money-laundering regulations, you might think that the FSA can track every transaction over £5,000 or £10,000 and will catch lots of criminals. That is rubbish. Cash is just driven underground. Criminals will still get around it. Thinking that monitoring everything will save an old widow's pension or catch a few money launderers does not work. The expense is enormous.
	There is the silly situation that small businesses cannot be rescued by giving them a cash injection quickly because it takes two weeks to move cash. When money has not come through at the end of the month and someone needs to pay a mortgage, I have seen people go to the bank counter and withdraw £5,000 in cash. Having got it, they hand it back across the counter to be put into the other person's account. Under regulations, it cannot be transferred directly from one account to another. A delay has to be imposed by regulation.
	I spoke in the previous debate on farming. I have information on government disclaimers. On looking at the poor farmer, even large farms tend to be run by individuals. My wife runs quite a large farming business. She has one secretary and two people who work half time: one person works on the farm and the other works on non-farming duties. Otherwise, she uses contractors. The paperwork we have to do ourselves. There are a number of departments busily telling her what to do. I have single payment scheme information here. "Relevant regulations" lists the "Council Regulation (EC) No. 1782/2003 (as amended)". There are three commission regulations, including 795/2004.
	There is also the "Statutory Instrument 2004 No. 2689". There are eight statutory instruments through to 2006 which apply. It then states:
	"This handbook reflects the Rural Payments Agency . . . interpretation of the SPS legislation at the time of going to print. It does not provide a definitive statement of the law. This can only be given by the courts".
	True. It continues:
	"RPA reserves the right to review its permission . . . You may therefore wish to seek independent legal advice".
	How are you going to pay for that? How many lawyers know about it? What it is saying is that you cannot rely on the handbook and that you will have to go back to the law. It does not send you all these documents or expect you to understand the position. For the Government to put in disclaimers like that because they cannot interpret the regulations is ridiculous. Non-compliance with the law is no defence and not knowing the law is no longer a defence, and you are advised to spend money on lawyers.
	The regulations try to make things safer or better or whatever, but when you inhibit risk, when there is less risk, there is less reward; greater risk gives greater reward. People get bored sometimes by the safe life. My 21 year-old son has told me that his friends are going abroad in order to make more money and so on. We need to get on with reducing regulation. The trouble is, it is the livelihood for many people to create and write the regulations and for others to enforce them. I do not know how on earth to break this slow, steady strangulation of business and the individual, but we need to do so.

Lord Stevens of Ludgate: My Lords, I thank the noble Lord, Lord Grenfell, and his committee for a most interesting and thought-provoking report and for the opportunity to debate it in the House. I was encouraged by his remarks when opening the debate. However, we talk about effective regulation; I would much prefer to talk about less regulation.
	Why does the United States have better growth, less unemployment, more investment as a percentage of GDP and higher productivity than the European Union? I suggest it is because it is less regulated. It is ironic that 70 per cent of our laws come from Brussels—Germany says its figure is 80 per cent—and here we are discussing regulation in the EU when it actually regulates us. The Government talk about reforming the House of Lords, but there is no mention of reforming the other place and the House of Lords to reflect the fact that both Houses have much less authority now than before.
	As to the EU, what better way to simplify regulation than to reduce the workforce? It cannot even produce annual accounts, and the EU's lack of confidence in its own ability is clearly shown by the fact that if you receive a pension from the EU you risk losing it if you criticise that body. One might ask why it is paying pensions to senior officers who must accept some responsibility for their failure to produce accounts. If I was running a public company in this way, I would probably be inside by now.
	None the less, the committee has made a valiant attempt to indicate how it would get more effective regulation. In Chapter 2, in five pages, it mentions "impact assessment" 53 times. This seems to be its main thrust. There is no real mention of the UK's extensive and substantial embellishment of EU regulations, making them even longer and more unintelligible.
	As we have been informed, 68 items of legislation are to be withdrawn and 1,400 rules and regulations are to be simplified, we hope, over the next three years. But in 2004, 6,000 regulations were introduced and there are more than 100,000 pages of EU regulations. Now the cost of EU legislation is to be measured. It sounds like the NHS. I suggest, as a start, that for every new regulation, 25 old ones be withdrawn. Arbitrary, I admit, but then so are most of the regulations. We now know how to hold a stepladder, thanks to the EU; how long will it be before we in this House have to take an entrance examination—and, presumably, pay for it—and regular refresher courses?
	The EU is completely out of touch. How could Commissioner Verheugen comment that he does not know whether the EU is over-regulated? As he says in the report, he does not know if the EU is over-regulated—maybe it is just a perception. He wants to improve EU regulation. It would be better to get rid of it.
	The Commission proposes to apply better regulation, consistently, by all regulators. What a nightmare that would be: another administrative jungle of standards comparisons. It wants to reinforce respect and the effectiveness of the rules. Tell that to the French, who—all credit to them—say yes, and frequently ignore the rules. The general acceptance level in the EU is normally accepted to be less than 50 per cent.
	In order to make a start on respect and effectiveness, why not get the member countries to observe the rules, with fiscal deficits as a starter? If the members themselves—the UK included—ignore the rules, how can you expect Europe's stakeholders to observe them? We must start from the top. Perhaps the UK could begin by not manipulating the PSBR and golden rules.
	Can your Lordships believe that the Commission is to set up—or maybe it has set up—a group of high-level national regulatory experts to advise on better regulation and monitor progress, thus enhancing the quality of the regulatory environment? Why not set up a body to reduce regulations by 25 per cent a year? Furthermore, this body will be there only to advise.
	The committee, as I have mentioned, makes much play of impact assessments. I confess my ignorance: I have never heard of these before. But let us look at the question of the noble and learned Lord, Lord Brown of Eaton-under-Heywood, on page 15. I have the distinction of having gone to the same school as him, so I admire his question even more. His question to Mr Hutton was:
	"Are there Impact Assessments which lead to the abandonment of the proposed legislation? Are you aware of any such incidents?"
	Mr Hutton replied:
	"Sadly I am not aware of any such examples off the top of my head".
	I note that the Chancellor of the Exchequer wants an effective business voice in the process of better regulation. Looking at the extremely distinguished members of the committee, I see eminent judges, ex-MPs, MEPs, local councillors, trade union officers and civil servants, but only a very small contribution from businessmen who are either full or part-time or who built up or ran their own business. Should this not be rectified?
	It is a tragedy that the communication anticipated that the UK, during its presidency, should seek better regulation; the UK should have sought less regulation. The EU should reduce its regulations and then make sure they work before implementing any new ones. It is a bit like this Government, who are endlessly changing the laws and then criticising the judiciary in particular for not implementing them as anticipated.
	Economies, as a simplification, rely on employment by business, large or small, to survive. It is business that provides the cash and enables the population to buy the goods and services essential for survival. It is business, one way or another, that pays for government and all the attendant expenditure. We have had thousands more administrators in the NHS in the past 10 years—to do what? Supervise the front-line workers? Standardise systems? Manipulate waiting lists? I hope that they have improved standards.
	Despite not being part of the euro, the UK is matching the EU's desire for bureaucratic standardisation. If you are running a business with several different product lines, you would have separate budgets for each division, supervision of cash flow and thus capital expenditure, and regular meetings with divisional management. You would not normally seek to standardise everything the division did, otherwise you would get the usual argument: "If you're so clever, you do it". Then there is no initiative from the division.
	That is the EU's, and thus the Government's, problem—micromanagement. Just look at our Finance Act as an example. It is impossible to micromanage effectively and it is counterproductive. I am afraid that we are dealing in the EU with a creature which may engulf us all. Fortunately, many members are already and increasingly ignoring its diktats. For example, the UK, France, Germany and Italy are all in breach of fiscal deficits and borrowing requirements and others are cooking the books to gain membership. With these governments setting such a fine example in regulation, I really wish the committee every success in ensuring effective and less regulation.

Lord Dholakia: My Lords, I add my thanks to the noble Lord, Lord Grenfell, and his committee for producing this very important report about ensuring effective regulation, and the follow-up report. I was very much looking forward to the contribution of the noble Lord, Lord Filkin, and, as usual, he has not disappointed me. His response makes good common sense, and I hope that the Minister will take note of it.
	The European Union and matters relating to it often generate a fairly robust response depending where we stand politically on the subject. There are the usual suspects who would ensure that their anti-European stance is reflected in their vociferous contributions and there are the pro-Europeans who ensure that there is a robust defence of most matters European. I find the report constructive; the committee has not lost its objective in reaching its conclusions. It is also the view of my noble friend Lord Maclennan of Rogart, who, unfortunately, cannot be with us today because of another engagement.
	The committee is right to underline that, without more effective regulation, it will be difficult to promote Europe's competitiveness, stimulate growth and employment, and improve the European Union's image. There is, of course, a very welcome change in the attitude displayed by the European Commission. The Commission cannot remain static. Equally, the EU institutions must embrace better regulated initiatives and ensure that there is a regular impact assessment. That is right. Monitoring this is an important aspect and we must not lose sight of that. It is not simply a matter of what works and what is appropriate, but of looking at all options, including a non-legislative framework, which may be a way forward in some instances.
	There can be no dispute about why regulatory reform is important. The purpose is to improve European and national legislation so that we can increase the European competitiveness so essential to the growth of our economy and employment. Surely, no political party can be opposed to those aims. We see China and India surging ahead and reshaping their economies. In south America, we see countries such as Brazil, Argentina and others as part of a larger trading bloc so that they can compete in the global economy. The committee is right that the five principles of good regulations do not need changing. All we need to do is to ensure that member states agree to these principles and that the regulations are respected, because the end product will stimulate growth and sharpen our competitiveness.
	But there is more to these principles. If we are to attract investment, economic growth and employment, then we need to look at how the rest of the world sees us. Are we a fragmented Union? Do we respond to the concerns of those who criticise us? Surely, the committee is right in advocating the need to improve the EU's image. More importantly, we should work towards the goal of ensuring that there is a better understanding of our institutions and working practices. The report goes some way to meeting that objective.
	I was really impressed with chapter 2, on impact assessment. I should say straightaway that the committee has been rather restricted in its definition. It talks about the impact assessment as an aid to political decision-making. I hope it applies not just to political decisions but to all decision-making processes, whether political or not. I strongly commend this chapter to wider readership.
	The committee should take great comfort that the report, particularly its recommendation on impact assessment, figured prominently in the UK presidency and will continue to be the basis for policy consideration in future years. It would be helpful to know if indeed that is the case. Was this legacy passed on to the Austrian presidency, and what steps are being taken to ensure that it is implemented?
	We already know that during the UK's presidency the Commission announced its intention to withdraw 68 legislative proposals that were either outdated or inconsistent with better regulatory standards. A further five proposals are being scrutinised, as the committee has told us. If I may divert a little at this stage, there is a lesson here for our Government. With the plethora of legislation and rules now on the statute book, should we not be making an impact assessment of what needs to be consigned to the bin?
	One of the most important developments since the publication of the EU Committee report is the Government's acceptance of the need to differentiate clearly between legislative and non-legislative approaches and to weigh up the cost of regulating against the benefits. What progress has been made to ensure that the proposals now form the EU law-making process? The Government's response was made in February this year.
	The committee's report is not just a confidence-building exercise in EU matters. If it is not to gather dust, and if the Government's intentions are designed to strengthen effective regulation-making processes, it would be helpful if future EU regulations could specify that the impact assessment was undertaken in advance of the EU lawmaking process.
	The EU Committee urges,
	"the Commission, Parliament and Council to make progress on firming up the procedure for drawing up and revising impact assessments throughout the legislative process".
	That is the core message, and the Government agree. We support this measure and thank the noble Lord, Lord Grenfell, and his committee for these excellent reports.

Lord Howell of Guildford: My Lords, I join all your Lordships in congratulating the noble Lord, Lord Grenfell, on securing this debate and producing two fascinating reports. I thank all his committee members for the enormously hard work they do, enabling us to have this kind of discussion.
	Every one of the speeches has been fascinating and informative. I enormously enjoyed listening to my noble friend Lord Stevens, who, to my mind, talked a great deal of robust common sense, and to the noble Earl, Lord Erroll, but the two speeches I enjoyed most of all were the marvellous contributions of the noble Lord, Lord Filkin, and my noble friend Lord Eccles.
	In a sense, those two speeches made a duo—they went together. They reminded us of the basic fact that the noble Lord, Lord Grenfell, and his colleagues are faced with: that the mindset of the European Union, by its nature, history and style, is to regulate and legislate. That is why I have always taken the view that good Europeans who are genuinely committed to the interests of the citizens of Europe should be tireless in trying to constrain and circumscribe the EU institutions, which are a constant, cascading fountain of regulation, and will continue to be so unless continuously checked.
	The other thing I enjoyed enormously was the famous appendix 3 of the noble Lord's report. That really is a corker. I was even thinking of having it blown up, framed and put on the wall in my study. What it shows so wonderfully is that my beloved France, a country I greatly admire and always enjoy visiting, and which is after all the home of the code Napoléon and the biggest intellectual influence on the European Union and its institutions, has the least information on what is actually going on. No information of any kind is available on what the French are doing to ensure effective regulation. They obviously could not care tuppence—or two centimes, I should say—about what is happening. Contrast that with the line taken in our country, which has assiduously ticked every box with a yes, right through to the rather sinister N at the end, which indicates that for small and medium-sized businesses no exceptions have been allowed by the bureaucratic machine. As they say, one picture is worth 1,000 words, and that picture certainly tells some very important stories about different countries' attitudes to regulation and to the work of the European Union institutions.
	As your Lordships wisely pointed out, regulatory reform is central not only to the success of European enterprise but to the promotion of competitiveness, growth, employment, prosperity and all other sectors, including a decent clean and green environment and balanced social reform. That applies on a national, a European and a regional scale. Speakers outlined various opinions on what better regulation might mean. However, I think we are all agreed that underneath that rather benign phrase lies the imperative to have a different outcome: that we all want less regulation, as my noble friend Lord Stevens said, and less gold-plating of European Union directives when we implement them—what is rather charmingly called in the report over-implementation. That is a polite way of referring to the absurd gold-plating which we have to endure.
	We have fought so hard in this House and elsewhere to resist such changes as the dreadful droit de suite. We have put so much effort into trying to resist such changes, sometimes successfully but, I am afraid, often unsuccessfully. We know that the solution is less regulation, more advance knowledge of what regulations will include and the acceptance of the principle—although it may not be a very strong one when subjected to pressure—that regulation should be the last rather than the first option, and that, if we have to have it, it should be as simple, concise and light as possible.
	I commend the Government on the work that they undertook during their recent presidency of the European Union. They struck the right note in this field. But even so, I remind the House that since 1997 under this Government there has been an average of more than 14 new regulations every working day, which is hardly the light touch or the example that we would like to see. I hope that from now on the situation will get better, but that has been the performance so far. We cannot work on the basis that if we achieve better regulation at the EU level—and I do not know whether we are going to—we should rush ahead with regulation at home. We must achieve success at both levels.
	I have no doubt that when the Minister replies, he will run through the numerous meetings which have been held and agreements which have been made on this issue, many of which have already been mentioned today. I am very glad that those things are going on but I should like to call for a little less talk and review and a little more action. For all the rhetoric, the regulatory burden has increased, especially for business. Indeed, it is increasing and, as noble Lords have pointed out, all the experts who gave evidence to the committee expect it to increase further. We have seen our own country's standing in the World Economic Forum competitiveness table slip from fourth to 13th in recent years, which means that instead of enabling better conditions for wealth creation and prosperity for all the people, especially the most vulnerable, we are doing the opposite. I support the committee's call for particular care to be taken over the impact of regulations on small businesses, but there is a fine line to be drawn between meaningful and worthwhile assessment and consultation on the one hand and breeding stakeholder fatigue on the other.
	We on the Conservative Benches wish to see a true culture shift. Perhaps that is absurd optimism but that is what we want to see both at home and at the European Union level. Frankly, when I look at some of the Government's responses to the report, I am not greatly encouraged. The idea of creating sectoral groups to look at regulation smacks of more bureaucracy. It is the old syndrome of creating a committee to abolish committees. One is left asking at what point these groups cease to exist. When do they decide that the system has been reformed enough? What are the timetables? How is it all going to be implemented?
	At the heart of all that is the colossal mountain of the European Union's acquis. I think that it has reached 98,000 or 100,000 pages of regulations and legislative regimes. I have read the comments in the report and in the Government's response on Commissioner Verheugen's plans to get a grip on all this and examine the acquis. But how will he do it? What will the Government do? Let me read out to your Lordships what the Government propose to do to support Commissioner Verheugen's approach:
	"The Government also welcomes Commissioner Verheugen's approach to simplification of the acquis. The October Communication Implementing the Community Lisbon programme: A strategy for the simplification of the regulatory environment announced the Commission's intention to focus firstly on regulation of the waste, construction and automotive sectors. It has also announced its intention to establish sectoral groups on the CARS21 model"—
	I do not know what that is—
	"to consider the competitiveness of, and regulation affecting the pharmaceutical, mechanical engineering and information and communication technologies sectors, as well as a cross-cutting group to examine the coherence of energy, environment and competitiveness policies. One of the objectives will be to screen the legislation affecting these sectors and integrate the results into the rolling programme".
	The rolling programme will apparently be to repeal, codify, recast and unify legislative regimes and legal Acts in very large quantities. We read a lot about impact assessments in the report; if anyone wants to assess the impact on me of all that, it reminds me very vividly of Charles Dickens's description in Little Dorrit of the office of circumlocution. Your Lordships will remember that was the office into which every conceivable Act, activity and measure of state went. A great many of them never came out again, or were lost in a frenzy of reviews, and reviews of reviews, committees set up to review the reviews, and other bureaucratic activities. I am not inspired at all by the tone or the words of that approach.
	I am conscious that this is a brief debate and short contributions are required, and I will try to conform to that. This issue really permeates every corner of our daily lives. Your Lordships have done extremely well, if I may impertinently say so, to be able to raise the issue and contribute to this debate, as the reports have enabled us to do. I hope that we will see true, effective and fair implementation and many fewer regulations, with a cutting down of the existing ones—the mountain of the existing acquis—and fewer regulations flowing out in the future and only where they are needed. I have very little confidence, in the light of what I have read out and read in the Government's response, that the Government's approach will lead to any noticeable results. As noble Lords have wisely said, regulation is in the nature of Brussels; it runs through the veins of the European Union institutions and it also runs through the veins of the present Government in power in this country. I have just a flicker of optimism that things might get a little better so, perhaps absurdly optimistically, I look forward to the Minister's response.

Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord, Lord Howell, for that warm welcome. My warmest words ought to be reserved for the noble Lord, Lord Grenfell, and his committee, for the important reports that they have prepared for us, which inform and are the background to this debate. We are grateful to the noble Lord, Lord Grenfell, and to all members of his committee for that work. I was somewhat surprised last Sunday afternoon to find myself spending an hour or two working my way through the reports. I would not necessarily do that on a Sunday afternoon, but, actually, it was quite a pleasurable experience and I enjoyed reading about something that, to be fair, is a dry subject—nevertheless, it was very stimulating.
	In a sense, this debate was started by my noble friend Lord Rooker, because he made plain the Government's general approach of taking a tilt at gold-plating or, as the noble Lord, Lord Howell, prefers to call it, over-implementation of regulations. That is a good starting point. My noble friend Lord Filkin put his finger on the heart of this debate by making an important plea that, in considering regulation, we should look carefully at the quality of the analysis of the policy that comes before it and, almost as importantly, the consequences of adding to the body of law that might flow from the making of regulation. Those two issues are important to us and they should inform the way that we work.
	I should also put on record my thanks to my noble friend Lord Filkin for the work of the Merits Committee, because its report, The Management of Secondary Legislation, published in March, added an important element to the debate. The Cabinet Office and other departments are preparing a response to that report and its recommendations. That will be laid before the House before the end of June. In some ways, that report is similar to the report that the noble Lord, Lord Grenfell, focussed on, and we very much welcome the way that the Merits Committee approaches its work—it is well informed and has a tightly drawn analytical approach.
	In recent years, regulatory reform has risen to the top of the EU agenda, as recent conclusions from the European Council prove and all speakers in this debate have made clear. There is increasing recognition by the EU institutions and the member states that better regulation is vital for Europe's competitiveness and jobs—and it is an important aspect of the Lisbon agenda. Regulation that is proportionate and based on effective consultation, which is key to our approach, demonstrates that the EU is responsive to the needs of business, the voluntary sector and, most importantly, its citizens.
	Recent presidencies, including that of the UK, have given high priority to this agenda, and the Commission, under the leadership of President Barroso and Vice-President Verheugen, is fully committed to regulatory reform. The Government strongly support the progress which has been made. However, we also recognise that this is a big agenda affecting the whole range of areas where the EU regulates, and a sustained effort is necessary over the medium term to achieve culture change, to which many noble Lords referred.
	The European Union has come quite a long way in achieving better regulation in a relatively short time—and the noble Lord, Lord Grenfell, acknowledged that. In recent years, the Commission in particular has reformed its procedures to achieve better regulatory outcomes at EU level. Our overall objective during the UK presidency was to begin to use these procedures and the Commission's commitments to make an impact on businesses and citizens. Progress was made on a number of fronts during our presidency. The Commission issued new guidelines on impact assessment for use by the Commission services when considering new regulatory proposals. These guidelines set out clearly that policy options must be fully analysed for their economic, social and environmental costs and benefits—a point made by the noble Lord, Lord Filkin.
	Robust impact assessments led to the cost of the chemicals regulation, REACH, being reduced by up to €660 million. Similarly, it contributed to the air quality thematic strategy being pegged at a point where the costs are justified by the benefits.
	Furthermore, during the United Kingdom presidency, the Government ensured that impact assessments were used comprehensively during policy discussions in the Council. That was certainly the case for more than 20 sets of proposals. In some cases, it led to the Commission amending either the impact assessment or the proposal itself. For example, earlier this year the Commission withdrew its proposal for a port services directive following intense dissatisfaction from the member states and the European Parliament on the quality of the impact assessment work that came with its proposal.
	The Commission announced proposals to simplify 222 basic areas of legislation, affecting more than 1,400 related legal acts, following extensive public consultation. That covers a wide range of the acquis, including environmental issues, financial services, statistics and transport. This initiative demonstrates the willingness of the Commission to look critically at the stock of EU legislation and consider its effectiveness for the 21st century.
	The Commission has also conducted a screening exercise to review proposals pending before the Council and Parliament since January 2004 and, as a number of noble Lords mentioned, as a consequence it has withdrawn 68 which it believes no longer fulfil better regulation principles.
	While these achievements are not inconsiderable, the Government are clear that much more needs to be done under future presidencies both to reinforce the progress made so far and to bring about a real culture change in how EU institutions approach regulatory activity.
	I now turn to some of the specific areas where the Government will be working with the Commission and the other member states in the coming months. The spring European Council conclusions reinforced the message that better regulation remains a high priority. In addition to existing strands of work, such as embedding effective use of impact assessment and progress on simplification, it identified some new priorities, which are in line with the proposals in the Select Committee's September 2005 report.
	The first of those is specific action to improve the regulatory environment for small and medium-sized enterprises—something to which the noble Earl, Lord Erroll, referred—through longer transition periods, reduced fees, simplified reporting requirements and exemptions. The Government will be encouraging the Commission to use these tools in new legislative proposals and will take particular account of impacts on SMEs in negotiations in the Council of Ministers. In particular, as announced in the Budget of my right honourable friend the Chancellor of the Exchequer, the Small Business Service will consult UK SMEs to identify EU regulations for which exemptions would be appropriate.
	The second area for specific action relates to measuring the administrative costs associated with EU legislation. The European Council invited the Commission to launch an exercise, looking at particular areas of legislation, to identify costs which arise directly from European law and those which arise from member states' transposition arrangements. We hope that that will lead eventually to the Commission setting measurable targets for reducing administrative burdens. Indeed, Vice-President Verheugen has recently spoken out in favour of setting a 25 per cent target. That is something with which the noble Lord, Lord Stevens, found particular favour, and I know that it is welcomed in, if I may describe it as such, the Grenfell report.
	A further area where the United Kingdom is keen to build on the work of our presidency is stakeholder consultation, particularly in relation to simplification of regulation. In September 2005, the Cabinet Office hosted a major conference attended by representatives from EU businesses. One of the main conclusions was that delegates wanted to see more groups established to facilitate consultation on regulation with businesses in specific economic sectors. The Commission piloted this approach last year with the CARS21 group, which looked at regulation in the automotive sector and included Commissioners, Ministers, industry representatives and NGOs. The group published its report in December 2005 and the UK will be working, in particular, to ensure that the elements aimed at simplification are acted upon by the Commission when it responds later this year.
	Subsequently, the Commission has established the High Level Group on Energy, Environment and Competitiveness, of which my right honourable friend the Secretary of State for Trade and Industry is a member, and groups to consider regulation in the pharmaceutical and mechanical engineering sectors. The Government hope that these groups will identify potential areas for simplification and provide constructive input to the direction of future European regulation.
	A number of questions were raised by noble Lords in the debate, and I will briefly respond to some of them. I have commented on the point of the noble Lord, Lord Filkin, about the importance of the EU being better at policy making. Not only do I agree with this, but the Commission's guidelines on regulatory impact assessments provide a clear framework for systematically analysing policy issues. For example:
	"Tackling the identified problem does not mean that you need automatically choose a regulatory option . . . Consider the full range of alternative actions available to the Commission. Is self-regulation a feasible option? . . . Is an information and education campaign sufficient?".
	That is the rubric; that is the approach. The discipline of regulatory impact assessments requires a more systematic process of policy making. We will see the benefit of that over the longer term. This includes the proper identification of objectives and options, including alternatives.
	The other important point made by the noble Lord, Lord Filkin, was in his identification of the importance of seeing problems upstream. That is absolutely right. Our guidance on transposition requires departments to start thinking about regulatory impact when a Commission proposal is being developed; in other words, before a proposal is formally issued. Regulatory impact assessments are produced and revised through the legislative process.
	I also have good news for the noble Lord, Lord Filkin, on pipe organs. That slightly threw me when the noble Lord referred to it, but I want to give this commitment. The UK Government do not believe that church and other pipe organs should be caught within the scope of this European legislation. That is a clear and definitive statement on that one.
	The noble Earl, Lord Erroll, made an important point about the cumulative impact, and how we best understand and know it. The Government are measuring the cumulative administrative burden of regulations in the United Kingdom—not an easy task—and that of European legislation. We intend to set targets for reducing administrative burdens across all departments. The EU is piloting its own methodology to measure cumulative administrative burdens. Vice-President Verheugen has announced, as I said earlier, his desire to push for a 25 per cent reduction in the admin burdens applied to us by the EU.
	I entirely understand the points about gold-plating. Noble Lords will of course know that the noble and learned Lord, Lord Davidson of Glen Cova, the Advocate General for Scotland, is conducting a review of whether the United Kingdom has over-implemented European legislation in the past, a concern which the noble Lord, Lord Howell, and I share. These findings will feed into government departments' efforts to reduce their regulatory burdens.
	I think it was the noble Lord, Lord Stevens, who made reference to the volume of legislation believed to come from Europe. In a robust and trenchant contribution to our debate, the noble Lord made the point, quite fairly, that our regulatory burden is not perhaps as great as that of some of our European competitors. That has probably contributed in good part to the strength of our economy. I certainly agree with that analysis. It is our understanding that EU legislation being transposed into national legislation in the UK is not as high as in our partner states across Europe, and certainly not as high as the 80 per cent which the noble Lord quoted for Germany. We are benefiting from, in general terms, a lighter-touch regulatory approach.
	The noble Lord, Lord Dholakia, quite rightly asked whether the Austrian presidency was taking up the baton on better regulation. Clearly, one of our objectives was to make sure that the regulatory approach—the efficacy and impact of regulatory impact assessments—was carried through when we passed over the presidency. I think that that has fairly happened.
	We welcomed the spring European Council meeting, which underlined the importance of better regulation as a core element of achieving the Lisbon strategy for jobs and growth. It is worth recounting that the spring Council urged all institutions and member states to implement their commitments—I know that noble Lords have been very critical of that—including the use of robust and balanced impact assessments, with measurement of administrative costs, and the emphasis on delivering the rolling programme of simplification for the priority sectors of waste, construction and the automotive industries. In consultation with the Council secretariat and member states in the working group for competitiveness and growth, the Austrian presidency has already produced a practical handbook for Council working group chairs on the use of regulatory impact assessments. There are clear signs that the Austrian presidency is working to the agenda that we set out and established during our time in the presidency post.
	The noble Lord, Lord Howell of Guildford, made reference to appendix 3 of the first report and asked whether we know why the annexe suggests that the UK does not provide exemptions for SMEs. There are exemptions in the United Kingdom for SMEs, as I explained in part. Those exemptions cover information and consultation, the REACH chemicals regulation, to which I have referred in the past, and state aid regulations in the agriculture sector. There are other examples that can be produced.
	I am extremely grateful to the noble Lords who have contributed to this debate, which I think has been very valuable. I hope that I am not tempting fate too much in saying that I hope that we have a regular debate of this sort, because it is important for us to take a view on the regulatory environment, as the report assists us to do.
	To sum up, we should recognise the important strides that have been made towards improving the European Union regulatory environment. Impact assessments are becoming part of the mainstream policy-making process in the institutions, and the Commission has taken action aimed at simplifying existing rules and reducing administrative costs. It is clear that the challenge for the future is to reinforce this work by focusing on achieving real, tangible improvements for businesses and citizens alike. The Government remain strongly committed to that agenda, and we will continue to press and to work with EU institutions and our member state partners to ensure that it delivers real benefits. The work of the committee of the noble Lord, Lord Grenfell, has helped us very much in that course and I join in the general congratulations on its output and important work.

Lord Grenfell: My Lords, in closing with just a very few remarks, I must first apologise to the noble Lord for having spoiled his Sunday with this report. I think that this has been a debate with many very thoughtful contributions. We have divided into optimists and pessimists. How optimistic or pessimistic we will remain depends very largely on the answer to the question posed by the noble Lord, Lord Howell: is there really a culture change in the Commission? On the evidence that we have received so far, I am definitely an optimist on that question.
	Let me make one brief clarification. The noble Viscount, Lord Eccles, noted in his very interesting speech the fact that the report did not address the issue of how subsidiarity and proportionality are affected by regulation and vice versa. The reason for this is that we followed up this report with a major report on the monitoring of the subsidiarity and proportionality principles, in which we addressed that issue.
	Finally, I totally share the burning ambition of the noble Lord, Lord Stevens, to see far less regulation. However, I hope that we can eventually find a rather less indiscriminately apocalyptic mechanism for implementing his solution of "one in, 25 out". None the less, I share his desire to see less regulation.
	It has been a great pleasure to participate in this debate. I thank all noble Lords who took part in it. It has moved the debate forward, and we look forward to coming back to this at some future date.

On Question, Motion agreed to.

EU: Effective Regulation(EUC Follow-up Report)

Lord Grenfell: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That this House takes note of the report of the European Union Committee on ensuring effective regulation in the EU: Follow-up Report (31st Report, HL Paper 157).—(Lord Grenfell.)

On Question, Motion agreed to.

Social Security (Income Support and Jobseeker's Allowance) Amendment Regulations 2006

Lord Evans of Temple Guiting: rose to move, That the draft regulations laid before the House on 24 April be approved [25th Report from the Joint Committee].

Lord Evans of Temple Guiting: My Lords, noble Lords will be aware that it is a condition of entitlement to jobseeker's allowance that claimants have to be available for and actively seeking work. However, there are a number of exceptions within the jobseeker's allowance regulations that protect jobseekers' entitlement when, for a good reason, they cannot meet the conditions. These regulations amend three of the jobseeker's allowance entitlement conditions: actively seeking work, availability for work and fortnightly intervention. The regulations provide, first, that jobseekers required to attend court or a tribunal for up to eight weeks will remain entitled to jobseeker's allowance until their period of court or tribunal attendance has ended. Secondly, jobseekers who have been temporarily detained in police custody for 96 hours or less will retain their entitlement to jobseeker's allowance. Thirdly, the availability rules for carers are extended to allow them 48 hours to attend a job interview and one week to take up the offer of employment.
	At present, when a jobseeker is required to attend court or a tribunal for longer than one day, he has to go through a complex process to maintain his existing level of financial support. Because he is not available for work during the time in court, his jobseeker's allowance claim is closed down. He then has the options of claiming income support or of claiming for his loss of income through the Courts Service. When he is no longer required in court, he must reclaim jobseeker's allowance. That process is not straightforward and payment is often delayed, creating additional financial hardship to those already on a limited income, often leading jobseekers to exercise the right to be excused from jury duty on the grounds of severe financial hardship.
	The first objective of these regulations is to help prevent any financial hardship for jobseekers required to attend court or a tribunal by treating them for a limited time as available for and actively seeking employment. This will mean that jobseekers called for jury service can undertake that duty without being financially penalised by losing benefit or facing delays in payment. It will also reduce administrative costs, as those jobseekers will no longer be forced to swap between benefits.
	Like jobseekers required to attend court or tribunal proceedings, those who have been temporarily detained by the police are not available for or able to seek work during the time they are detained. Under current regulations, a jobseeker detained by the police for one or two days could lose his benefit for up to two weeks. Following a recommendation from the Court of Appeal, we have decided that those who are detained temporarily and subsequently released should not lose jobseeker's allowance. The Police and Criminal Evidence Act 1984 currently provides for a maximum period of detention of 96 hours. Under the Criminal Procedures (Scotland) Act 1995, a person can be detained in custody for a shorter period before he has to be released or charged. Therefore, these regulations will allow anyone who has been temporarily detained by the police for up to 96 hours and then released to be treated as available for and actively seeking work during his period of detention. This will apply only to those in police detention for 96 hours or less and then released. Jobseeker's allowance will not be payable to anyone detained for more than 96 hours.
	The third objective of these regulations is to enable jobseekers with caring responsibilities sufficient time to make alternative care arrangements before taking up an offer of employment. To receive benefit, jobseekers must normally be available immediately to attend a job interview or to take up employment. However, we recognise that for some groups this may not be possible. That is reflected in the current legislation, which allows volunteers one week's notice to take up a job offer. Those with caring responsibilities have 48 hours' notice.
	We are responding positively to recommendations from the Equal Opportunities Commission for jobseekers with caring responsibilities to have a longer period in which to attend a job interview or take up an offer of employment. These regulations will extend the time available for carers to take up a job offer to one week and to 48 hours to attend an interview. By increasing the amount of time available to make alternative care arrangements, we will make jobseeker's allowance more accessible to people with caring responsibilities. That should be particularly beneficial to lone parents and those who have no access to formal childcare, giving them the option of claiming jobseeker's allowance, and helping them to keep in touch with the labour market.
	I hope that noble Lords will agree that these regulation changes are worth while. They support this Government's promise of,
	"work for those who can and support for those who cannot",
	by ensuring that in the future those receiving jobseeker's allowance are not disadvantaged as a result of being in the situations I have outlined.
	We are satisfied that this statutory instrument is compatible with the European Convention on Human Rights. I beg to move.
	Moved, That the draft regulations laid before the House on 24 April be approved [25th Report from the Joint Committee].—(Lord Evans of Temple Guiting.)

Lord Skelmersdale: My Lords, these regulations, although slightly strange, will be welcomed by those people currently on jobseeker's allowance or income support who are involved in court proceedings, in police custody or caring for children or older people. I shall take those three themes in order.
	Allowing those involved in court or tribunal proceedings up to eight weeks to be treated as available for and actively seeking work, as the Minister said, thereby remaining eligible for benefit during this time rather than having to make a new application when the court proceedings are over, is welcome. What is magic about eight weeks? Although I understand that most tribunals and trials will be over within eight weeks, there are those, perhaps fraud trials, which take considerably longer. Why should jurors in such circumstances be disadvantaged?
	I cannot imagine that many people would be in police custody for more than the 96 hours that the Minister has just been talking about. But we know, and have heard recently, of terrorist cases where—I stand to be corrected—that 96 hours can be waived. I wonder whether the department has the correct time for this. Surely, in both those cases, it is not beyond the wit of the Minister's officials to devise a scheme in which long periods of activity, either in a court setting, including of course tribunals, or in police custody, would obviate the need to reregister for jobseeker's allowance or income support.
	A few moments ago I described these regulations as slightly strange. I was originally told by the Government Whips' Office that they would not need to be debated until after the Whitsun Recess. Late last week I was told that the department had changed its mind and that these regulations needed to be on the statute book by the end of next week. What has caused the alteration in the department's thinking? I am not usually a conspiracy theorist, but could it be the fact that the Secretary of State has today made a speech about women's social security benefits, and wants to include the fact that the third thing these regulations do is extend the time allowed for jobseekers with caring responsibilities to take up an offer of work from 48 hours to one week? This is obviously sensible, as it usually takes longer than 48 hours to arrange for someone else to take over the caring responsibilities. A week, if you are in this position, strikes me as being much more reasonable.
	I shall pass over the fact that we are due to have a Statement some time next week on the way in which the Government are to implement the proposals in the Turner report. I note merely that if it does not mention the future position of women, an awful lot of people, not least the noble Baroness, Lady Hollis—I am sorry she is not in her place—are going to be seriously annoyed. I also note that it has been leaked that the Secretary of State has made a speech today in which he announced plans to give women over 45 a full state pension—a change that will be seen as a reward for bringing up children and acting as a carer. If the report I read in today's newspaper is true, I ask again: what is the hurry, when, in less than a week, the Secretary of State will make a Statement to Parliament, where such announcements should properly be made?
	There is no question but that we need more flexibility for those with caring responsibilities. An important feature of today's regulation is the greater flexibility it provides for those with caring responsibilities to take up offers of employment. Women in particular have suffered from a benefits system that has not been sufficiently responsive to their requirements. For example, the current state pension and national insurance systems are not sufficiently flexible for the 2.2 million women who are not accruing a basic state pension, either because they do not work or because they do not earn enough to make contributions. Those are the department's own figures.
	The latest figures from the Government Actuary's Department for 2005 show that less than a third of women reaching state pension age are entitled to a full basic state pension. Meanwhile, childcare costs have risen by 27 per cent over the past five years. Official figures show that, for every five new childcare places created, three close, and there has been a consistent fall in the net growth of places since 2003. Given the difficulties in finding affordable childcare, greater flexibility for carers in taking up offers of employment will be welcome, as it gives them more time to find suitable arrangements. Earlier this week, we were talking about simplifying the benefit system, which has grown like Topsy over the years. Although, as I have said, these regulations are beneficial to a few people on benefits, they do nothing to ease the situation in this regard. Did the department's new simplification unit, which the noble Lord, Lord Hunt of Kings Heath, mentioned, advise on them? If so, what was its reaction?
	Despite all these questions, we on these Benches believe that this is a sensible holding exercise that will serve the purpose very well, and, until we see a report of the simplification unit, we support them.

Lord Oakeshott of Seagrove Bay: My Lords, I do not propose to emulate the noble Lord, Lord Skelmersdale, although I congratulate him on his ingenuity in having a dry run for the debate on the pensions White Paper next week. Many of the points he makes are sensible.
	I shall focus on the decision that there should be an eight-week cut-off period. It seems to me that the first line of Regulation 2(4)(c)(a), which is,
	"for more than eight weeks",
	is unnecessary, because the second criterion is,
	"where he does not, before the period during which he is required to attend the court or tribunal, give an employment officer notice, in writing where requested by the employment officer, that he is so required".
	That seems to me to be a perfectly satisfactory and proper way in which to notify the employment officer so that he knows whether a case is on. I cannot for the life of me see why the principle is affected, whether the case lasts for one week or 12 weeks, and why the person should still continue to get their jobseeker's allowance. That is an important principle, and I do not see why eight weeks is the cut-off point. Indeed, I do not think that there should be a cut-off point at all. It will take a good deal to persuade me why that should be so.
	I agree with the noble Lord, Lord Skelmersdale, that we need some explanation on the 96 hours, especially in relation to people being detained under the Terrorism Act, whom we must always remember are suspects; they have not been convicted of anything. Could we have an explanation of that? My strongest feeling is that the eight weeks is not an appropriate limit; indeed, there should be no limit at all, as long as the notification has properly been made. Subject to those points, we on these Benches support these sensible regulations.

Lord Evans of Temple Guiting: My Lords, I am very grateful to the noble Lords, Lord Skelmersdale and Lord Oakeshott, for their general welcome of the order. A number of important points have been raised, which I shall attempt to answer. I suspect that noble Lords may like a fuller explanation of the point about the eight-week period than I can give today. I have spoken to officials, and we shall provide that in the next few days.
	Our research on the eight-week limit has shown that the vast majority of court cases last eight weeks or less. I acknowledge that a minority can be much longer—fraud cases have been mentioned—and officials will keep that under review. If any jobseekers are shown to be disadvantaged by the eight-week limit, we shall consider extending the provision. This is a very important issue and we shall—

Lord Skelmersdale: My Lords, I am grateful to the Minister for giving way, but I ask again—what is the magic about the eight weeks? I still have not understood the point.

Lord Evans of Temple Guiting: My Lords, the "magic"—although there is probably nothing magical about it at all—is simply that after looking at the length of court cases and doing a very considerable amount of analysis, it was felt that an eight-week period would capture most and be the period that conformed with the spirit of what we were trying to do in the regulations. But as I said, we shall write at greater length on the matter, and share the analysis and research with noble Lords.

Lord Oakeshott of Seagrove Bay: My Lords, I am grateful to the Minister, but I am not sure whether I heard him give an assurance that no jobseeker would be disadvantaged. He said that he would look into it, but surely the way in which to prevent anyone being disadvantaged would be to remove the provision.

Lord Evans of Temple Guiting: My Lords, that is the point that has been made and we shall consider it. As I said a moment ago, if any jobseekers are shown to be disadvantaged by the eight-week limit, we shall consider extending that provision. So I am introducing some degree of flexibility here, which is what noble Lords appear to be aiming for.

Lord Skelmersdale: My Lords, I do not think that consideration of extending a time limit if it becomes necessary is in the least satisfactory. We are being asked to legislate for a precise period and to have absolute certainty. What the noble Lord has just said does not give us any certainty at all.

Lord Evans of Temple Guiting: My Lords, I repeat what I have said, which strikes me as having some clarity—that if any jobseekers are shown to be disadvantaged by the eight-week limit we shall consider extending the provision, and we shall keep the whole question of eight weeks under review. The figure of eight weeks was arrived at after very careful thought and research. I am saying not only that the eight-week limit is flexible but that we will share with noble Lords the analysis that has made the department decide that eight weeks is the correct period.

Lord Skelmersdale: My Lords, will the analysis be available before the matter is debated in another place?

Lord Evans of Temple Guiting: My Lords, we undertake to be in touch with noble Lords before the matter is debated in another place.
	The noble Lord, Lord Skelmersdale—apologising for perhaps sounding like a conspiracy theorist—asked why the regulations have been brought forward in time. As far as we are aware, no regulations have been brought forward. It was decided that those would be introduced today and they were scheduled for today. If the noble Lord, Lord Skelmersdale, is saying that they were already scheduled for the Order Paper and was brought forward, again, I will be very happy to look at that and let him know why the Whips' Office decided to reschedule them. Our view is that we are debating regulations that were put on the Order Paper for today.
	Both noble Lords asked about the 96 hours in relation to anyone suspected of terrorism. All I need to say is that the 96 hours does not apply to anyone in detention being questioned on a terrorist matter.
	The noble Lord, Lord Skelmersdale, asked whether the regulations went through the benefit simplification unit. The answer is yes, although this change pre-dates the requirement for consultation with simplification. However, it is aware of the change and has approved it as a simplification because it is beneficial to the customer as financial support is maintained. It also reduces administrative costs. I believe that I have addressed the questions asked. As I said, I will return to noble Lords on the eight-week period.

Lord Skelmersdale: My Lords, I am sorry to bully the Minister, but this whole matter is totally unsatisfactory. Having got some way to getting some answers on the subject of the eight weeks, we now discover that the 96 days does not apply in terrorist cases. The regulations ought to be taken away and redrafted. The position is very unsatisfactory.

Lord Evans of Temple Guiting: My Lords, all that I can say to the noble Lord, Lord Skelmersdale, is that I do not agree. I explained in my opening remarks what the regulations are attempting to do and it does precisely that. There are details around the edges, some of which are very important, that noble Lords have raised. On why we have introduced the regulations, I gave absolutely clear reasons why and the effects that introducing the regulations will have on the jobseeker's scheme. I do not accept the point made by the noble Lord, Lord Skelmersdale, that the regulations should be taken away and withdrawn. With apologies for that, I commend the regulations to the House.

On Question, Motion agreed to.
	House adjourned at three minutes past seven o'clock.